Why is voluntary exchange an important source of economic prosperity?
A) All of the above are correct.
B) It makes it possible to produce a larger output as a result of gains from division of labor and specialization.
C) It makes it possible to produce a larger output as a result of lower per unit costs that often accompany large-scale production.
D) It moves goods from people who value them less to people who value them more.
A) All of the above are correct.
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Suppose the overall MPC is 0.9. If a $2 billion increase in imports to the United States will lead to a $10 billion decrease in GDP, the value of the marginal propensity to import must be
A) 0.1. B) 0.2. C) 0.5. D) 0.8.
The table above shows the production possibilities for an economy. When the economy produces a combination of 900 books and 50 loaves of bread,
A) production efficiency occurs because resources are not overused. B) allocative efficiency is achieved because both goods are produced. C) production efficiency is not achieved. D) allocative and production efficiency are both achieved. E) production efficiency is not achieved but allocative efficiency might be achieved.
If a country's currency ________ the dollar, its exchange rate is fixed
A) is exchanged in currency markets for B) has a floating exchange rate value which is equal to C) depreciates against D) is pegged to
In the horizontal segment of the aggregate supply curve, when GDP:
A. increases, the price level rises. B. decreases, the price level falls. C. increases, the price level does not change. D. increases, the price level falls.