Which situation would most likely shift the production possibilities curve for a nation in an outward direction?
A. An increase in the amount of discrimination
B. A decrease in the state of technology
C. An increase in the supply of resources
D. A decrease in the quality of products
Answer: C
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If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?
a. It will increase. b. It will decrease. c. It will be unchanged in both countries. d. It will rise in one country and fall in the other, but the total is unchanged. e. Uncertain; economic theory has no answer to this question.
Changes in the GDP deflator reflect
a. only changes in prices. b. only changes in the amounts being produced. c. both changes in prices and changes in the amounts being produced. d. neither changes in prices nor changes in the amounts being produced.
Which of the following correctly identifies a reason why some authors prefer to report the standard errors rather than the t statistic?
A. Having standard errors makes it easier to compute confidence intervals. B. Standard errors are always positive. C. The F statistic can be reported just by looking at the standard errors. D. Standard errors can be used directly to test multiple linear regressions.
Consider a large open economy that has a positive current account balance. (a)Suppose the domestic government increases the tax rate on firm revenues. Draw a diagram to explain the effects on the world real interest rate, saving in each country, investment in each country, and the current account balance in each country in equilibrium. Explain your work.(b)In addition to the tax increase in part (a), suppose now that the foreign government increases lump-sum taxes on individuals. Draw a new diagram to incorporate the overall effects of both tax changes and explain the effects (from the initial equilibrium with neither tax change) on the world real interest rate, saving in each country, investment in each country, and the current account balance in both countries. Explain your work.
What will be an ideal response?