Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: When the economy overheated, the U.S. government cooled it down with higher taxes, spending reductions, and less money. (See Figure 8.6.)
A. A.
B. B.
C. C.
D. D.
Answer: C
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Refer to the table above. Once trade begins, a possible international price (i.e. terms of trade) for textiles in terms of grapes is
A) $5. B) 2/5. C) 2. D) 4/5.
What is one reason perfectly competitive firms wish to be ever more efficient?
A) Individual firms are awarded by the tax code to be more efficient. B) Individual firms can better control their costs than the price they can charge. C) Individual firms can better control their costs than their output levels. D) Individual firms don't need to be efficient; government policies do not reward efficiency.
Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. The opportunity cost for Canada is:
A. ½ pair of shoes for every 2 apples. B. 2 pairs of shoes for each apple. C. ½ apple for each pair of shoes. D. 2 apples for each pair of shoes.
Which government policy raises the interest rate and raises investment spending?