The principle of comparative advantage holds that nations should
a. specialize in activities for which they have the lowest opportunity cost.
b. strive to become self-sufficient in production.
c. produce only goods and services for which they have absolute advantage.
d. become less labor-intensive and more capital-intensive.
a. specialize in activities for which they have the lowest opportunity cost.
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What does "there is no such thing as a free lunch" mean in economics?
A. Sometimes people may take friends out to lunch and pay for them. B. All items in the lunch menu have specific prices. C. Products only have value because people are willing to pay for them. D. Scarce resources are used up to provide "freebies" and giveaways.
Under a fractional reserve banking system,
A) banks keep a fraction of their reserves on hand as deposits. B) banks keep all of their reserves on hand as deposits. C) banks keep a fraction of their deposits on hand as reserves. D) banks keep all of their deposits on hand as reserves.
Any amount that a bank chooses to keep on hand beyond what it is required to is called:
A. excess reserves. B. excess deposits. C. federal funds. D. extra holdings.
Which of the following is a true statement?
A. Under normal conditions, there is a short-run trade-off between inflation and unemployment. B. There is a long-run trade-off between inflation and unemployment. C. The short-run Phillips Curve is vertical. D. The long-run Phillips Curve is horizontal.