Assume there is no government or foreign sector. If the MPS is 0.05, the multiplier is
A. 0.95.
B. 10.
C. 20.
D. 50.
Answer: C
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If the opportunity cost of 1 wristwatch is 4 wall clocks in Japan and 2 wall clocks in Germany, it makes sense for Germany to produce wristwatches
Indicate whether the statement is true or false
Two important theories of unemployment are
A) game theory and search theory. B) search theory and the efficiency wage theory. C) the efficiency wage theory and the quantity theory. D) the quantity theory and game theory.
When trade is possible, each country can produce the goods that it has:
A. a comparative advantage at producing, rather than the exact combination of goods its consumers want. B. an absolute advantage at producing, rather than the goods it has a comparative advantage in. C. an absolute advantage at producing, rather than the exact combination of goods its consumers want. D. a comparative advantage at producing, rather than the exact combination of goods its producers want.
When price is below the equilibrium level, there is a shortage of the commodity being sold
a. True b. False Indicate whether the statement is true or false