Because people may change how they react when economic policies are changed, comparing macroeconomic models is
A. not attempted by legitimate economists.
B. difficult.
C. only effective for long-run analysis.
D. impossible.
Answer: B
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Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state that
A) the two nations should not specialize in the production of goods. B) specialization can lead to an increase in the production of all goods. C) specialization can lead to an increase in the consumption of all goods. D) neither country has a comparative advantage in the production of any good.
Which of the following accounts for a movement along a given AD curve?
a. The substitution effect b. The tax rate effect c. The real-balance effect d. The foreign aid effect e. The government spending effect
Even though households do not actually purchase certain items, the government estimates and adds to the consumption component what the household would pay for these items in the marketplace. An example of this type of item is
a. a car that an individual builds from parts of old cars b. food that a farm family grows for themselves c. a pond that a household member digs by hand d. police and fire protection e. a barn that a household builds on their own property
To use an analogy that helps explain the ABCs of economic development: To build a skyscraper, you must first build the foundation. In order for an economy to create economic development, it must first develop a solid
a. network of resources b. production possibilities curve c. infrastructure d. dualist structure e. base for foreign investment and aid