Using Figure 1.5, if an economy has the capacity to produce represented by PP2, then point E represents
A. A combination of potato chips and doughnuts that is not attainable.
B. A constant trade-off between potato chips and doughnuts.
C. An efficient use of resources.
D. None of the choices are correct.
Answer: C
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The benefits of net capital inflows to a country include all of the following except:
A. interest and dividend payments owed to foreign investors. B. a potentially higher growth rate. C. a higher rate of investment in new capital. D. a larger pool of total savings.
Cynthia is an Oklahoma wheat farmer. The demand for her wheat is
A) perfectly inelastic. B) inelastic but not perfectly inelastic. C) elastic but not perfectly elastic. D) perfectly elastic. E) unit elastic.
A relative measure of the importance of trade is
A) the dollar value of trade. B) trade as a percentage of GDP. C) the dollar value of trade adjusted for inflation. D) trade as a percentage of investment. E) None of the above.
What are the information costs associated with forward contracts?
What will be an ideal response?