Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of
A. comparative advantage.
B. microeconomics.
C. division of labor.
D. absolute advantage.
Answer: C
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In order for the United States to use discretionary fiscal policy to deal with a recessionary gap,
A) the public must elect members of Congress that understand economics. B) the President's and Congress's economic advisors must agree on the proper government programs to slash. C) the President and Congress must agree on which taxes to hike. D) time must pass in order for Congress to decide what taxes and government programs to change. E) since 2002, the President has been given the authority to make up to a 10 percentage point change in government expenditure programs.
How are corporate profits taxed in the United States?
A) Earnings are taxed first by state sales taxes and then as corporate profits at the Federal level. B) Corporate profits are not taxed at all. C) Earnings are taxed first as personal income then as corporate profits at the Federal level. D) Earnings are taxed first as corporate profits then as personal income after dividends are paid.
Labor productivity depends on the
a. the effectiveness of government b. the size of the economy c. the proportion of the labor force that is unionized d. the amount of capital e. All of the answers are correct
If a bank is lending money at 6.25% while the government is lending money at 8.25% and the rate of inflation is 3.5%, what is the real interest being earned by the bank?
A. 2.00% B. 2.66% C. 2.75% D. 6.25%