If nations trade on the basis of comparative advantage
A. a nation can usually gain only it has an absolute advantage.
B. all trading partners share equally in the gain.
C. all trading partners share in the gain with distribution determined by their negotiating ability.
D. a nation with an absolute advantage gains more than the other nations.
C. all trading partners share in the gain with distribution determined by their negotiating ability.
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The expenditure multiplier in the ISLM framework is smaller than that derived from the simple Keynesian model because
A) velocity is always assumed to be constant. B) the economy is assumed to be in the liquidity trap. C) the aggregate supply curve is assumed to be horizontal. D) the LM curve is assumed to have a positive slope.
A critical component of supply-side economics is that
a. there is no wage that is so low that someone will not be willing to work for it. b. as the wage gets higher, workers choose significantly less leisure. c. labor supply is inelastic. d. as the wage gets higher, workers are richer and choose more leisure.
When people invest, they face a trade-off between which of the following?
a. a higher risk and higher return or a lower risk and lower return b. a higher risk and lower return or a lower risk and high return c. a higher risk and no change in the rate of return d. the price and the interest rate
When government provides goods and services, they are often produced in which of the following ways and why?
a. inefficiently because the government only produces when the benefits nation-wide outweigh the costs b. efficiently because the government always makes efficient decisions c. efficiently because the government allows special interest groups to determine what is produced d. inefficiently because there is no competition and no potential of going out of business