Discuss some reasons why reductions in world trade barriers are driving the world toward a global economy.
What will be an ideal response?
Answer: Lower trade barriers allow companies from different countries to buy, sell, and invest more easily and profitably.
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If X and Y are perfect substitutes, which of the following assumptions about indifference curves is not satisfied?
A) Completeness B) Transitivity C) More is preferred to less D) Diminishing MRS E) none of the above (All of the above assumptions are satisfied.)
If people cannot distinguish between goods A and B, then economists describe the goods as
a. having a zero cross elasticity b. being perfect substitutes c. belonging to an oligopolistic industry d. belonging in different markets e. having a cross elasticity of one
The Condorcet paradox shows that
a. allocations of resources based on majority rule are always inefficient. b. problems in counting votes can negate legitimate democratic outcomes. c. the order on which things are voted can affect the result. d. transitive preferences are inconsistent with rationality.
Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply?
A) Aggregate demand and potential real GDP decrease continuously. B) The aggregate demand curve shifts to the right except during periods when workers and firms expect higher wages. C) Potential real GDP increases continuously during economic expansions and decreases continuously during economic recessions. D) The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.