Which of the following is consistent with international trade theory?
A) The United States needs trade restrictions to stay competitive.
B) The United States has been falling behind Europe and Japan because its economy is too open.
C) The standard of living within a country is a function of the economic strength of the economy and not of its relative position.
D) A country should strive for comparative advantage in manufacturing.
C
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Alan puts $20,000 in an uninsured savings account at the Boston National Bank. Susie borrows $20,000 from the Boston National Bank, flies to a Central African country, and is never heard from again. Which of the following is true in this case? a. Alan will lose her $20,000
b. Alan will lose her $20,000 if she and Norma are related. c. Alan will lose her $20,000 if the First National Bank makes all of its loans to people who run off to South Pacific islands. d. Alan will not lose her $20,000 no matter what happens to the First National Bank. e. Alan will not lose her $20,000 unless the Fed fails
Suppose that if a local McDonald's restaurant reduces the price of a Big Mac from $4.00 to $3.25, the number of Big Macs it sells per day will increase from 4 to 5. Explain the output effect and the price effect resulting from this change. Using a graph,
illustrate both the loss in revenue from selling each of the first 4 Big Macs for $0.75 less and the additional revenue from selling 1 more Big Mac. What is the total change in revenue received which results from this price decrease? What will be an ideal response?
Stopping inflation
A. may be costly, if the inflation is stopped by inducing a recession. B. will have no benefits or costs associated with it. C. may be costly, but the benefits of stopping inflation will always outweigh the costs of such actions. D. can only benefit the economy, because the price level will be reduced.
Which of the following will happen if there is a fall in the supply of credit in an economy without any change in the demand for credit?
A) The real output will fall. B) The labor demand in the economy will increase. C) Its consumption expenditure will increase. D) The real interest rate will fall.