Suppose that only two goods are produced in an economy. If a country possesses the comparative advantage in the production of one good then it:
A. must also possess the comparative advantage in the production of the other good.
B. must also possess the absolute advantage in the production of that good.
C. cannot also possess the comparative advantage in the production of the other good.
D. cannot also possess the absolute advantage in the production of that good.
C. cannot also possess the comparative advantage in the production of the other good.
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Assume that the graphs show a competitive market for the product stated in the question.
Select the graph above that best shows the change in the digital camera market when the productivity of workers who produce cameras increases.
A. graph (1) B. graph (2) C. graph (3) D. graph (4)
The expression "There's no such thing as a free lunch" means that
a. services may be free, but goods are never free b. even if it has a price of zero, a good or service has a cost c. charitable organizations should not serve free lunches to the poor d. poor people are really the ones who pay for their allegedly free lunches e. someone has to pay the market price for a good or service
If no fiscal policy changes are implemented to fight inflation, suppose the aggregate demand curve will exceed the current aggregate demand curve by $900 billion at any level of prices. Assuming the marginal propensity to consume is 0.90, this increase in aggregate demand could be prevented by:
a. increasing government spending by $500 billion. b. increasing government spending by $140 billion. c. decreasing taxes by $40 billion. d. increasing taxes by $100 billion.
A U.S. federal budget deficit that raises real interest rates is most likely to:
a. lead to a depreciation of the dollar in the foreign exchange market. b. encourage foreign investment in U.S. securities. c. lead to an increase in exports. d. lead to an appreciation of other currencies relative to the U.S. dollar. e. discourage imports of foreign goods.