If Country A’s opportunity cost of corn is lower than Country B’s opportunity cost of corn, then
a. Country A has a comparative advantage in the production of corn.
b. Country A has an absolute advantage in the production of corn.
c. Country A should import corn from Country B.
d. Country B should produce just enough corn to satisfy its own residents’ demands.
Ans: a. Country A has a comparative advantage in the production of corn.
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According to the Keynesian fixed wage theory, real wages should be
a. positively correlated with income. b. not correlated with income. c. fixed. d. negatively correlated with income.
Which of the following statements would Keynes have been most likely to agree with?
A) Saving is more responsive to changes in interest rates than to changes in income. B) Say's law holds in both a barter and money economy. C) The internal structure of the economy is not always competitive enough to allow prices to fall. D) Investment is exclusively dependent upon the interest rate. E) none of the above
Refer to Figure 4.1. Suppose Alvin chooses Top, while Simon chooses Down, and Theodore chooses Right. Simon's payoff will be
A) 2. B) 8. C) 10. D) 18.
In the classical model, a rise in the marginal income tax rate would
a. cause the price level to rise and the level of real output to fall. b. cause the price level and the level of real output to both fall. c. cause the price level to rise with no effect on real output. d. leave both real output and the price level unchanged.