Suppose Canada has a comparative advantage relative to the United States in the manufacture of clothing and the United States has a comparative advantage in producing agricultural products. Which of the following is most likely to occur?
A. Canada will sell clothing to the United States but not buy any agricultural products from the United States.
B. Canada will sell clothing to the United States and the United States will sell agricultural products to Canada.
C. Canada and the United States will not trade agricultural products or clothing.
D. Canada will sell agricultural products to the United States and Canada will buy clothing from the United States.
Answer: B
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If the graph shown represents Steph's budget constraint, and the price of hairbands were to increase, the slope of Steph's budget constraint would become:
A. steeper, reflecting the fact that hairbands are now relatively less expensive.
B. flatter, reflecting the fact that hairbands are now relatively more expensive.
C. steeper, reflecting the fact that earrings are now relatively less expensive.
D. flatter, reflecting the fact that earrings are now relatively more expensive.
What good or service creates positive externalities?
a. Vaccination against measles b. Vegan cookies c. Organic sweaters d. Eyesight correction surgery
When the federal government incurs a budget deficit, it will
A) mint more coins and spend them. B) create money out of thin air. C) impose a special tax on all income earners. D) borrow money from the Federal Reserve System by issuing securities. E) borrow money from the public by issuing government securities.
What is a pure price change?
What will be an ideal response?