If Mary has an absolute advantage over Bill in performing each of two tasks, then
a. Mary must have a comparative advantage in both tasks
b. Mary cannot benefit by specializing in one and trading with Bill for the other
c. Mary should specialize in both tasks
d. Mary cannot have a comparative advantage in either task
e. Mary should specialize in the one in which she has a comparative advantage
E
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If uncertainty causes commercial banks to increase their holdings of excess reserves, other things constant, this will
a. reduce the money supply during a period of inflation and increase it during a recession. b. reduce the size of the deposit expansion multiplier. c. increase the size of deposit expansion multiplier. d. reduce the size of the deposit expansion multiplier during a period of inflation and increase it during a recession.
Answer the following statement(s) true (T) or false (F)
1.Money market equilibrium occurs at that real interest rate where the quantity of money demanded equals the quantity of money supplied. 2.In the long run, if the money supply rises by 20 percent, the price level rises by 20 percent. 3.During an economic recession, the Fed will engage in a contractionary monetary policy. 4.By implementing a contractionary monetary policy, the Fed decreases the money supply and increases interest rates. 5.If the economy is at full employment, an increase in money supply will create a new equilibrium that cannot be sustained.
The capabilities approach allows us to focus on issues of:
A. income, poverty, and economic growth. B. poverty, inequality, and human development. C. human development, capital development, and technological progress. D. personal happiness, individual pleasure, and pain avoidance.
A characteristic of the market system is:
A. Extensive use of direct methods of production B. A focus on labor, as opposed to capital resources C. Reliance on the use of capital goods to expand total output D. Avoidance of producing goods that do not satisfy consumer wants directly