"Cheap foreign wages" is a poor argument for protection because it fails to recognize the importance of productivity. Which of the following does NOT contribute to increasing productivity?
A) Education and training
B) Government subsidies
C) Infrastructure
D) Capital
B
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The theory of comparative advantage suggests that nations should produce a good if they:
a. have the lowest opportunity cost. b. have the lowest wages. c. have the most resources. d. can produce more of the good than any other nation.
When natural disasters, such as hurricanes on the U.S. Gulf Coast or an earthquake in Japan, disrupt supply chains and push up the costs of production, this may result in
A. Cost-push inflation. B. Wage-pull inflation. C. Labor-push inflation. D. Demand-pull inflation.
The opportunity cost of rebuilding the Gulf Coast after hurricanes Katrina and Rita could be the
A. decrease in available Federal Student Loan funds. B. delay in availability of up-armored vehicles for use by U.S. troops in Iraq. C. delay in rebuilding of highway bridges in Minnesota. D. all of the options are correct.
Why do governments prefer to avoid excessive current account surpluses? Or, why are growing domestic claims to foreign wealth ever a problem?
What will be an ideal response?