What is an example of a positive external shock to aggregate supply?
(A) China announces that it will import 50 percent more corn from the United States.
(B) Demand for new suburban houses increases the value of farmland.
(C) Good weather leads to an unusually productive harvest for corn farmers.
(D) A popular new diet encourages consumers to buy more corn flakes.
Ans: (C) Good weather leads to an unusually productive harvest for corn farmers.
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What goods are available to all without direct payment?
A. private goods B. public goods C. common goods D. toll goods
Using a model of imperfect competition, economist Daniel Trefler concluded that the North American Free Trade Agreement:
a. cost Canada more than 100,000 jobs that were never replaced. b. presented no real issue about job loss in Canada. c. caused Canada to lose 5% of jobs in manufacturing because Canadian tariffs had to be cut, but over time the trade agreement created higher productivity and more jobs to offset losses. d. created new jobs in Canada from day one, as firms sold across the border and undercut U.S. firms.
An alternative to using simultaneous equation models with panel data is:
A. to use OLS estimates after first differencing the data. B. to use fixed effects transformation on the equations and then apply 2SLS. C. to convert the equations into reduced form and then apply feasible generalized least squares. D. to convert the equations into reduced form and then apply OLS.
A Jackson Pollock painting can cost $1.2 million, whereas a poster reproduction of the same painting costs only about $15. The reason is that:
A. the total utility of Jackson Pollock paintings is greater than the total utility of Jackson Pollock posters. B. the opportunity cost of Jackson Pollock paintings is greater than the opportunity cost of Jackson Pollock posters. C. Jackson Pollock paintings have more substitutes than Jackson Pollock posters. D. the marginal utility of Jackson Pollock paintings is greater than the marginal utility of Jackson Pollock posters.