If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods
a. True
b. False
A
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How should the central bank design its monetary policy during a recession if the nominal interest rate has already hit the zero lower bound?
What will be an ideal response?
With respect to the demand side, the classical model excludes
a. exogenous changes in investment b. exogenous changes in government spending. c. exogenous changes in taxes. d. exogenous changes in money demand. e. All of the above
If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate
A. is 21%. B. is 25%. C. is 20%. D. cannot be determined from the given data.
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. Refer to Table 3-26. Assume that Japan and Korea each has 2400 hours available. If each country spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 cars for 6 airplanes, then
a. Japan and Korea will both gain from this trade.
b. Japan will gain from this trade, but Korea will not
c. Korea will gain from this trade, but Japan will not
d. Neither Japan or Korea will gain from this trade