Any item that serves as a medium of exchange is called
A) gold.
B) capital.
C) silver.
D) money.
Ans: D) money.
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When an economy's resources are not fully employed, then it must be true that the:
a. production point is located outside and to the right of the production possibilities curve. b. production point is located along the production possibilities curve. c. production point is located inside and to the left of the production possibilities curve. d. production possibilities curve shifts to the right. e. production possibilities curve shifts to the left.
Assume the nominal dollar-per-euro ($/€) exchange rate appreciates by 2%, U.S. prices rise by 5% and Euro-Area prices rise by 3%. By approximately how much does the real exchange rate change?
a. There is no change. b. 1% c. 2% d. 3% e. 4%
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and
consume 60 bushels of corn and 400 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by a. 280 bushels of corn and 450 bushels of oats. b. 340 bushels of corn and 500 bushels of oats. c. 360 bushels of corn and 520 bushels of oats. d. 360 bushels of corn and 640 bushels of oats.
If the price of a good in a closed economy is lower than the world price, then with an open economy this country will be a ________ of that good.
A. price taker B. net importer C. net exporter D. price setter