Refer to the graph shown.
The graph demonstrates Saudi Arabia's and the United States' production possibility curves for widgets and wadgets. Given these production possibility curves, you would suggest that:
A. No trade should take place.
B. Both countries should produce an equal amount of each.
C. Saudi Arabia specialize in widgets and the United States in wadgets.
D. Saudi Arabia specialize in wadgets and the United States in widgets.
Answer: C
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One form of economic stimulus that state governments can use is to exempt certain types of purchases from state sales tax
For example, a law that permanently exempts business equipment from state sales tax may stimulate purchases of these goods because the law effectively reduces the price of the equipment. Business equipment such as computers or vehicles are durable goods, so should we expect the tax exemption program to have more impact on equipment demand in the short run or long run? A) More impact in the long run because business equipment demand becomes more income elastic in the long run B) More impact in the long run because business equipment demand becomes more price elastic in the long run C) More impact in the short run because business equipment demand becomes more income elastic in the long run D) More impact in the short run because business equipment demand becomes more price inelastic in the long run
Stagflation could be caused solely by a shift in the aggregate demand curve
a. True b. False Indicate whether the statement is true or false
An externality refers to the idea that
A. explicit costs differ from implicit costs. B. decision-makers do not internalize all the costs. C. private and internal costs differ. D. we cannot do anything that does not affect other people.
From a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply. Why?
What will be an ideal response?