Answer the following statements true (T) or false (F)
1) Answer the question on the basis of the following information. Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information. Beta would prefer terms of trade at, or close to, 1X = 1½Y.
2) Answer the question on the basis of the following information. Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information. If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say that the gains from specialization and trade are 10X and 10Y.
3) Answer the question on the basis of the following information. Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information. There is no basis for trade between Alpha and Beta because Beta has an absolute advantage in the production of both goods.
4) Answer the question on the basis of the following information. Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information. Alpha would prefer terms of trade at, or close to, 1X = 2 / 3 Y.
1) T
2) T
3) F
4) T
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A Social Security system in which payroll taxes that workers and their employers pay in go directly to retirees and other beneficiaries is known as
A) a pay-as-you-go system. B) an individual-account system. C) a primary-deficit system. D) a social-lockbox system.
If the production of a particular good involves significant external costs, to force the externality to be internalized the government might:
a. impose a tax on production of the good in order to increase production. b. impose a tax on production of the good in order to decrease production. c. offer a subsidy for production of the good in order to increase production. d. offer a subsidy for production of the good in order to decrease production.
Assume that an economy is in equilibrium with a budget deficit of $130 billion, positive net exports of $453 billion, and savings equal to $1,550 billion. If taxes are zero, then planned investment spending must be equal to:
a. $1,550 billion. b. $130 billion. c. $1,873 billion. d. $1,227 billion. e. $967 billion.
The duopoly price strategy provides ________ incentive to maintain cartel pricing as compared to the grim-trigger strategy.
A. a greater B. less of an C. the same D. The answer depends on the firms' average cost curves.