Which of the following statements is true?
A) When a nation has an absolute advantage over other nations in producing all the goods and services, it cannot gain from trade.
B) Absolute advantage relates to production per units of inputs and comparative advantage involves the opportunity cost of producing different goods.
C) When a nation has an absolute disadvantage over other nations in producing a good, it cannot gain from trade.
D) Absolute advantage involves the opportunity cost of producing different goods and comparative advantage relates to production per units of inputs.
B
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The effect of a tariff on a foreign monopolist is similar to a large nation imposing a tariff on a small nation. What is the implication for the welfare of the home nation?
a. Only very large tariffs bring any benefit to the home nation. b. No tariffs are the best policy; all tariffs have a deadweight net loss. c. Small tariffs can be beneficial, but only to a certain point. d. The foreign producer may actually raise prices to make the tariff impossible to impose.
Which of the following is most likely an example of a free good?
A) Sand in aquarium B) Sand in the middle of a desert C) Sand in a children's sandbox D) Sand at the beach
Which of the following is TRUE about product markets?
A) Factors (land, labor, capital, and entrepreneurial ability) flow from firms to households. B) Factors (land, labor, capital, and entrepreneurial ability) flow from households to firms. C) Goods and services flow from firms to households. D) Goods and services flow from households to firms.
Hyperinflationary episodes are always related to extremely rapid growth of:
A) real GDP. B) money demand. C) interest rates. D) money supply.