Applied to trade in two goods between two countries, the principle of comparative advantage does not suggest that
a) a nation with an absolute disadvantage in producing both goods will have a comparative advantage in producing one of them
b) the two nations will specialize in the production of different goods
c) both nations will equally benefit from trade
d) consumption possibilities will exceed production possibilities after trade
e) each nation will import the good whose opportunity cost of production is higher at home than abroad
c) both nations will equally benefit from trade
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An active stabilization policy designed to limit the size of government would
a. raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap. b. raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap. c. reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap. d. reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.
Which of the following is true of two stage least squares estimators?
A. The two stage least squares estimator is equal to the instrumental variable estimator if R2 is equal to 1. B. The two stage least squares estimators are biased if the regression model exhibits multicollinearity. C. The two stage least squares estimators have lower variance than the ordinary least squares estimators. D. The two stage least squares estimators have large standard errors when R2 lies close to 0.
Which of the following is a market in which banks lend reserves to one another?
A) required reserve market B) open market C) discount market D) federal funds market
A downward shift in the Fed's policy reaction function corresponds to a ________ the aggregate demand curve and a decrease in exogenous spending corresponds to a ________ the aggregate demand curve.
A. movement up; shift right of B. shift left of; movement up C. shift right of; shift left of D. shift left of; shift right of