Total government spending (federal, state, and local) sums to approximately
a. 10 percent of the U.S. economy.
b. 20 percent of the U.S. economy.
c. 40 percent of the U.S. economy.
d. 50 percent of the U.S. economy.
C
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Limits on the flow of foreign exchange and financial investment across countries are called
A) currency restrictions. B) credit constraints. C) fixed exchange rates. D) capital controls.
Operation on the basis of comparative advantages implies which of the following?
(a) Countries allocate their resources across all sectors regardless of opportunity costs. (b) Countries will specialize even if they can produce everything. (c) Countries not efficient in any production should not trade. (d) none of the above.
The emphasis upon export surpluses in mercantilist theory
(a) is also called the "beggar-thy-neighbor policy" and a "favorable" balance of trade. (b) was thought to be a good thing by business people because it meant that more money was circulating and more money meant higher prices and brisk trade. (c) was thought to be a good thing by governments because it created brisk trade which yielded higher tax revenues than did slack trade. (d) is characterized by all of the above.
According to the law of diminishing marginal product, if all the inputs to a firm are increased in equal proportions, a. output will increase more than in proportion to the increase in the inputs
b. output will increase less than in proportion to the increase in the inputs. c. output will increase exactly in proportion to the increase in the inputs. d. The law of diminishing returns says nothing about what will happen to output when all inputs are increased in equal proportions.