Trade that is within a country or between countries is based on the principle of
A) comparative advantage. B) scarcity.
C) competition. D) absolute advantage.
A
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Using the money demand and money supply model, show and explain why the Federal Reserve cannot achieve a target for both the money supply and an interest rate
What will be an ideal response?
A major problem with using the egalitarian principle to distribute income is that
A) it would eliminate the incentives that rewards provide in an economic system. B) it is difficult to know when an equal distribution of income has been achieved. C) it would not be fair to the wealthy. D) there exist no mechanisms to carry out such a scheme.
Historically, some governments have relied on the revenue generated from printing currency to finance government spending. Give two examples of government's relying on paper currency to finance wartime expenditures. What do you expect happened to inflation rates during these historical episodes?
What will be an ideal response?
If both the real interest rate and the nominal interest rate are 3 percent, then the:
A. inflation premium is zero. B. real GDP must exceed the nominal GDP. C. nominal GDP must exceed the real GDP. D. inflation premium also is 3 percent.