Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing
A. neither cheese nor cars.
B. cars.
C. both cheese and cars.
D. cheese.
Answer: D
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There is an inverse relationship between the present value of a future amount and the interest rate used for discounting
a. True b. False
Other things equal, contractionary fiscal policy will lead to:
a. an increased budget deficit (assuming an initial budget deficit). b. a reduced budget surplus (assuming an initial budget surplus). c. an expanded budget surplus (assuming an initial budget surplus). d. increased government purchases.
Figure 13-3
?
Oligopolist A cuts price in an attempt to enlarge his share of the market. His competitors retaliate with identical price cuts. In this case, in Figure 13-3, oligopolist A will move from point A to which point?
A. B B. C C. D D. E
If over the next year the inflation rate in the euro area is higher than the inflation rate in Japan, then the euro should depreciate relative to the Japanese yen
a. True b. False Indicate whether the statement is true or false