An example of acquired comparative advantage is that
A. some U.S. consumers prefer German cars over American cars because German cars have a reputation for being very safe.
B. the U.S. government provides a subsidy to firms that are trying to increase their exports to other countries.
C. China specializes in the production of labor-intensive goods because of the amount of labor available in the country relative to capital.
D. the United States imports coffee beans because coffee beans cannot be grown in the United States.
Answer: A
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Diminishing marginal rate of substitution can be seen when indifference curves
A) cross. B) are convex. C) are downward sloping. D) become flatter as we move down and to the right.
Suppose as a reaction to terrorist attacks, the U.S. government were to create a new branch of the military employing 1,000,000 new service men and women to monitor malls, large sporting events, and infrastructure (bridges, dams, refineries, etc.). Hiring and paying these people would likely
A. decrease aggregate demand. B. increase aggregate supply. C. increase aggregate demand. D. decrease aggregate supply.
Consider the following payoff matrix facing Harry and Sally when each chooses to go to the coffee shop listed. Harry wants to avoid Sally at the coffee shop and is not happy when Sally ends up in the same shop he chooses. Sally would like to see Harry, and so she is not happy when Harry ends up in a different coffee shop. Harry StarbucksDunkin DonutsSally StarbucksH: ?1, S: 1H: 1, S: ?1 Dunkin DonutsH: 1, S: ?1H: ?1, S: 1Assuming that Sally and Harry go to the coffee shop each day, what is Harry's best strategy?
A. Go to Starbucks one day and Dunkin' Donuts the next and maintain that pattern. B. Go to Starbucks because Sally won't go there. C. Go to Dunkin' Donuts because Sally won't go there. D. Randomly choose between going to Starbucks and going to Dunkin' Donuts.
Most economists would agree that the national debt should be reduced
A. during both periods of recession and prosperity. B. just during periods of recession. C. just during periods of prosperity. D. never.