When comparative advantage is based on transferable factors, the law of one price tends to:
A. stabilize the advantage.
B. amplify the advantage.
C. erode the advantage away.
D. make the advantage into an inherent comparative advantage.
Answer: C
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The value of intermediate goods is excluded from the measurement of GDP in order to:
A. adjust for inflation. B. index economic activity. C. avoid double counting. D. measure GDP in constant prices.
The ways in which monetary policy affect output and prices are known as:
A) channels B) stations C) vehicles D) means
When no one owns a particular resource
A) property rights are clearly defined. B) individuals have legal recourse for any damages caused to their resource. C) no one has any incentive to consider externality spillovers associated with that resource. D) positive externalities will arise.
The Fed does not try to reduce frictional unemployment because it
a. is easier to eliminate with fiscal policy b. is not a serious social problem c. has microeconomic solutions d. signals a strong economy e. rarely exceeds a 1 percent rate