Normative economics involves
A. a statement of "what should be."
B. a statement of fact.
C. a statement of "what is."
D. a statement that is purely descriptive.
Answer: A
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Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's excess reserves equal
A) zero. B) $7,500. C) $67,500. D) It is impossible to determine without additional information.
List the three most common forms of trade barriers
What will be an ideal response?
When people use recent information to gradually adjust their forecasts of inflation, they are said to have:
a. static expectations. b. adaptive expectations. c. rational expectations. d. spiraling expectations.
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Which of the following statements is true?
a. Brazil has an absolute advantage in producing only coffee. b. Brazil has an absolute advantage in producing only sugar. c. Chile has an absolute advantage in the production of both coffee and sugar. d. Chile has an absolute advantage in producing only coffee. e. Brazil has an absolute advantage in the production of both coffee and sugar.