Which of the following theories predicts that a country will export those goods that use the country's abundant factor(s) intensively and import those goods that use the country's scarce factor(s) intensively?
A. The theory of purchasing power parity
B. The theory of absolute advantage
C. The theory of comparative advantage
D. The Heckscher-Ohlin theory
Answer: D
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The fact that every dollar that the government spends or transfers must ultimately be provided by the taxes and user charges it collects plus government borrowing is known as the
A) government balance sheet constraint. B) government budget constraint. C) tax collection constraint D) user charge constraint.
If the utility function (U) between bananas (B) and jam (J) can be represented as U = 3ln(B)+4ln(J) the marginal utility of jam equals
A) 4B. B) 3B/J. C) 4/J. D) B/J.
If a Balanced Budget Amendment to the U.S. Constitution were passed, during economic prosperity, such an amendment would
A. have no impact on the economy. B. dampen those good times. C. cause those good times to be even better. D. throw the economy into a depression.
Product differentiation means
A) making a product that has perfect substitutes. B) making a product that is entirely unique. C) the inability to set your own price. D) making a product that is slightly different from products of competing firms. E) making your demand curve horizontal.