Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
a. Alland has both a comparative and absolute advantage in producing food.
b. Alland has comparative advantage, but not an absolute advantage, in producing food.
c. Georgeland has both a comparative and absolute disadvantage in producing clothing.
d. Georgeland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing.
d. Georgeland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing.
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The largest share of the U.S. private economy is
A) in manufacturing. B) competitive or monopolistically competitive. C) oligopolistic. D) monopolistic.
Under a liquidity trap in the New Keynesian model,
A) prices cannot be sticky. B) monetary policy is ineffective. C) the economy is always efficient. D) fiscal policy is ineffective.
When the Fed issues currency
A. this increases our money supply only if it replaces old, worn-out currency. B. this increases our money supply only if it is used to accommodate the public's desire to hold more currency. C. this increases our money supply either if it replaces old, worn currency, or if it is used to accommodate the public's desire to hold more currency. D. this does not increase our money supply.
In the Keynesian-cross model, if the MPC equals 0.75, then a $1 billion decrease in taxes increases planned expenditures by ______ and increases the equilibrium level of income by ______.
Fill in the blank(s) with the appropriate word(s).