The terms of trade between any two countries for two goods cannot be between their respective opportunity costs if there are to be any gains in trade.
Answer the following statement true (T) or false (F)
False
The terms of trade are based on opportunity cost being a measure of how much of one good must be given up to get a fixed amount of another good; the terms of trade should be bound between domestic and foreign opportunity costs. The domestic country would not buy abroad if it costs less to produce domestically, nor would it sell abroad if it could receive more income from selling domestically.
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Hailey's income is $40 per week. She spends all of it on coffee (C) and doughnuts (D). Coffee costs $2 per cup and doughnuts cost $1 each. Her marginal rate of substitution for coffee with doughnuts is D/C. How many cups of coffee and how many doughnuts will she purchase each week?
A. 15 cups of coffee and 10 doughnuts B. 10 cups of coffee and 20 doughnuts C. 20 cups of coffee and 10 doughnuts D. 5 cups of coffee and 30 doughnuts
Refer to the information provided in Scenario 25.2 below to answer the question(s) that follow.SCENARIO 25.2: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
Refer to Scenario 25.2. What is the money multiplier in this economy?
A. 10 B. 16.67 C. 20 D. 50
Labor-market regulations in developing countries
a. always reduce employment b. usually reduce employment c. may reduce employment, but the evidence is weak d. rarely reduce employment e. none of the above
If autonomous expenditures increased by $10 billion, what is the change in aggregate demand at a given price level if the MPC to consume is 0.8?
a. increase by $50 billion b. increase by $100 billion c. decrease by $100 billion d. decrease by $10 billion