The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B
B. recessionary; C
C. recessionary; A
D. expansionary; A
Answer: C
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The country with a comparative advantage in the production of a good has a
A) vertical production possibilities frontier. B) higher opportunity cost of production. C) horizontal production possibilities frontier. D) linear production possibilities frontier. E) lower opportunity cost of production.
Refer to Figure 3-2. A technological advancement would be represented by a movement from
A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
OLI theory is a direct contradiction of trade theory, especially trade theory based on comparative advantage
Indicate whether the statement is true or false
Suppose you conduct a study in which subjects are asked the following questions: 1. "Imagine that you have decided to go to a basketball game where the cost is $25 per ticket. As you enter the arena, you discover that you have lost your $25. Would you still pay $25 for a ticket?" 2. "Imagine that you have decided to go to a basketball game and you pay $25 for the ticket. As you are walking into the arena you realize that you have lost your ticket. Would you pay another $25 for another ticket?" You find that 90% of your subjects answered "Yes" to the second question, compared to the 50% that answered "Yes" to the first question. This is an example of:
A. the default effect. B. the endowment effect. C. narrow framing. D. dynamic inconsistency.