As the result of specialization and trade, according to the law of comparative advantage, total output will
a. decline because specialization is costly.
b. rise only when there is an accompanying decline in the total output of one's trading partners.
c. rise if a nation is a net exporter and fall if the nation is a net importer of goods and services.
d. increase since resources will be better directed toward their highest-valued use.
D
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Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Firm X ($/day) $500$514$530$555$585 Cost to Firm Y ($/day) $400$420$445$480 $520Cost to Firm z ($/day) $300$325$360$400 $550It would cost Firm X ________ to reduce emissions by one ton if it currently emits 3 tons, and ________ to reduce emissions by one ton if it currently emits 2 tons.
A. $14; $25 B. $14; $16 C. $30; $55 D. $16; $25
The Fed is concerned about inflation. Its policy will ________ U.S. short-term interest rates and, in the foreign exchange market, lead to the value of the U.S. dollar ________
A) lower; rising B) lower; not changing C) raise; rising D) lower; falling E) raise; not changing
A PPF, such as the one above, that bows outward illustrates
A) decreasing opportunity cost. B) increasing opportunity cost. C) that technology is improving. D) that productivity is falling.
The actual real wage must be below the equilibrium real wage in order to encourage firms to produce at any output level above the natural rate
Once workers realize this situation, their expected price level will gradually rise and they will demand a higher nominal wage. This description of a business cycle adjustment is part of which of the following theories? A) Classical model B) original Keynesian model C) Friedman fooling model D) the RBC model