Comparative advantage indicates that:
a. specialization and exchange will cause trading partners to reduce their joint output.
b. a nation can gain from trade even when it is at an absolute disadvantage in producing all goods.
c. trade with low-wage countries will pull down the wages of workers in high-wage countries.
d. all of these.
b
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The fictional country of Alpetra increases the income tax rate so that tax revenues increase by $30 million. In response, consumption falls by $8 million. If GDP and government spending remains the same and Alpetra is a closed economy, what is the change in investment?
a. Investment increases by $8 million. b. Investment decreases by $8 million. c. Investment increases by $38 million. d. Investment decreases by $22 million.
Two receptionists work at Widget, Inc., one in the morning and one in the afternoon. They are an example of
a. job specialization b. job rotation c. job sharing d. none of the above
Which of the following macroeconomic variables is acyclical?
A. Money supply B. Real interest rates C. Consumption D. Unemployment
An economist estimates that the maintenance of a public recreation center costs $80,000 a year and that the recreation center generates $65,000 a year in revenue from usage fees. From society's point of view, the maintenance of this recreation center is
A. potentially efficient because the value of the gains exceed the value of the losses. B. inefficient, because everyone in the community pays taxes to support it, but only those who pay fees to use the recreation center benefit. C. potentially efficient because no one would be made worse off as a result of maintaining the recreation center. D. efficient because the revenues generated by the recreation center benefit the entire public.