The U.S. economy in the mid-2000s did not experience stagflation because
A. energy prices declined.
B. the energy content of GDP declined.
C. it became more volatile since 1980.
D. All of these responses are correct.
Answer: B
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Suppose in Vietnam a worker can produce either 16 units of cloth or 2 bicycles while in China a worker can produce either 20 units of cloth or 5 bicycles
a. Which country has an absolute advantage in cloth production? In bicycle production? b. What is the opportunity cost of 1 unit of cloth in Vietnam? In China? c. What is the opportunity cost of 1 bicycle in Vietnam? In China? d. Which country has a comparative advantage in cloth production? In bicycle production? e. Suppose each country has 1,000 workers. Currently, each country devotes 40 percent of its labor force to cloth production and 60 percent to bicycle production. What is the output of cloth and bicycles for each country and what is the total output of cloth and bicycles between the two countries? f. Suppose each country specializes in the production of the good in which it has a comparative advantage. What is the total output of cloth and bicycles in the two countries? g. Provide a numerical example to show how Vietnam and China can both gain from trade. Assume that the terms of trade are established at 6 units of cloth for 1 bicycle.
An improvement in technology would shift
a. the demand curve leftward b. the demand curve rightward c. the supply curve leftward d. neither the supply nor the demand curve; instead, there is movement along both of them e. the supply curve rightward
Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible
a. True b. False Indicate whether the statement is true or false
In a closed economy that is in equilibrium, investment is equal to:
A. private saving. B. public saving. C. private saving plus public saving. D. disposable income minus consumption.