We say that a country completely specializes in production when it spends all of its resources producing:
A. those goods it has an absolute advantage in producing.
B. what it can make more of than anyone else.
C. a particular good.
D. only what other countries need.
Answer: C
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Consider a closed economy without the government. If the savings rate in the economy is 20% and the aggregate savings is $10,000, the aggregate consumption in the economy is:
A) $37,000. B) $45,000. C) $10,000. D) $50,000.
If a foreign company operating in a country changes work rules resulting in a more flexible allocation of resources in the various sectors of the domestic economy,________
A) the productivity of domestic workers is likely to decrease B) the productivity of domestic workers is likely to increase C) the gross domestic product of the economy is likely to decrease D) the Human Development Index of the country is likely to decrease
Trade between two countries can benefit both countries if
A) each country exports that good in which it has a comparative advantage. B) each country enjoys superior terms of trade. C) each country has a more elastic demand for the imported goods. D) each country has a more elastic supply for the exported goods. E) each country produces a wide range of goods for export.
Suppose government purchases increase by $100 million in an economy, which leads to total output increasing by $500 million. The size of the multiplier is _____
Fill in the blank(s) with the appropriate word(s).