________ is determined by the world demand for and the world supply of the good
a. Tariff
b. World price
c. Exchange rate
d. Terms of trade
b
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Suppose Ann can produce 8 units of a material good (M) or 4 units of a spiritual good (S) in a day, while Ben can produce only 3 Ms or 3 Ss in a day. Both Ben and Ann can potentially produce a larger combination of M and S if
A) Ann produces both M and S and Ben produces neither. B) Ann specializes in M and Ben specializes in S and neither of them trade. C) Ann specializes in S and Ben specializes in M and they exchange with one another. D) Ann specializes in M and Ben specializes in S and they exchange with one another.
In the case of national defense protection, ________ is a better policy than protection
A) a production subsidy combined with free trade B) an income tax C) direct government provision of infrastructure D) None of the above is better
Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 40 units of clothing but no food. Suppose each has the utility function U = F ? C. The price of clothing is always $1
What is the competitive equilibrium price for food? A) $5 B) $4 C) $3 D) $2
Which of the following will cause the LM curve to shift down?
A) a reduction in the expected future interest rate B) a reduction in current income C) a reduction in expected future taxes D) all of the above E) none of the above