What does it mean for a nation to have an absolute advantage in producing a product?
What will be an ideal response?
If a country has the ability to produce a product at a lower resource cost than anyone else, the country is said to have an absolute advantage.
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The above figure depicts the Edgeworth box for two individuals, Al and Bruce. If the endowment is at point a, and trade is possible, which of the following points are possible equilibria?
A) a and b B) a and c C) b and d D) c and d
The oversimplified money multiplier formula, when the required reserve ratio is m, is
a. change in money supply = change in reserves × m. b. change in money supply = (1/m) /change in reserves. c. change in money supply = (1/m) × change in reserves. d. change in money supply = m/change in reserves.
The creation of new bank reserves could lead to a multiple increase in the money supply
a. True b. False Indicate whether the statement is true or false
Which of the following appears in M2 but NOT M1?
A. currency B. checking account balances C. money market mutual funds D. traveler's checks