Comparative advantage in production is achieved by
A. Having a lower opportunity cost of producing a good relative to that of other countries.
B. Being able to produce a good with fewer inputs than in other countries.
C. Subsidizing, specializing, and lowering the price of an exported good.
D. Having terms of trade that are better than the terms of trade faced in other countries.
Answer: A
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Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and reserve-related (central bank) transactions become more positive (or less negative). b. The real risk-free interest rate rises, and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate rises, and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. e. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive).
Assume the United States can use a given amount of its resources to produce either 20 airplanes or 8 automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:
a. neither good. b. automobiles. c. airplanes. d. both goods.
Long-run economic profits would most likely exist in which market structure?
A) monopoly, monopolistic competition, and oligopoly B) monopoly and oligopoly C) monopoly and monopolistic competition D) monopoly only
Which of the following is a characteristic of monopolistically competitive industries?
A. a small number of firms B. significant barriers to entry C. strategic behavior D. product differentiation