Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Which of the following statements is true?
a. Brazil has an absolute advantage in producing only coffee.
b. Brazil has an absolute advantage in producing only sugar.
c. Chile has an absolute advantage in the production of both coffee and sugar.
d. Chile has an absolute advantage in producing only coffee.
e. Brazil has an absolute advantage in the production of both coffee and sugar.
c
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A macroeconomic surplus occurs when consumers reduce their consumption expenditures and increase their saving
a. True b. False Indicate whether the statement is true or false
When the government imposes a barrier to entry in a market,
a. more resources will be wasted by firms attempting to secure and maintain market power. b. the options available to consumers will increase in the protected market. c. allocative efficiency will be improved by the reduction of wasteful competition. d. consumers will be better able to direct the smaller number of producers to serve their interests.
Suppose the money market is in the liquidity trap and the Fed increases the supply of money. Individuals would rather hold __________ than __________ because they expect that bond prices can go no __________
A) bonds; money; higher B) bonds; money; lower C) money; bonds; higher D) money; bonds; lower
Which of the following contributes to the popularity of the argument that government spending expands employment?
A) The employment generated by the additional spending can be accomplished without increases in taxes or borrowing. B) The employment generated by the additional spending is highly visible, while the employment crowded out by taxing, spending, and borrowing is largely unseen. C) The employment generated by the additional spending is not easily seen, while the employment crowded out by taxing, spending, and borrowing is highly visible. D) Higher taxes will be popular if they finance spending that expands employment.