Which of the following phenomena cannot be explained by the simple comparative advantage theory?
A. A country with a lot of skilled labor tends to export highly technical goods.
B. A country that does not have much farmland tends to import agricultural goods.
C. A country imports and exports the same goods.
D. A country tends to export the goods that it can produce at a lower opportunity cost.
Answer: C
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A fall in the demand for U.S. exports would result in a rise in the exchange rate when
a. there is no capital mobility and exchange rates are allowed to float. b. there is capital mobility. c. exchange rates are allowed to float. d. the country has a balance of payments surplus. e. both c and d.
Deadweight loss occurs when
A) consumer surplus is greater than producer surplus. B) surplus losses to one group due to intervention are not offset by surplus gains to another. C) consumer surplus is reduced. D) consumer surplus is negative.
A government policy of providing free public education is an example of a policy to promote economic growth by:
A. increasing the availability of natural resources. B. increasing human capital. C. improving technology. D. increasing physical capital.
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.