Most theories of comparative advantage explain trade patterns due to international differences in
A) demand conditions.
B) supply conditions.
C) demand and supply conditions.
D) tariffs.
B
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In the economic way of thinking, a tax on pollutants
A) unfairly places the burden of pollution reduction on the poor. B) is inefficient because it won't reduce pollution to zero. C) tries to alter relative money costs to reflect new decisions about who has which rights. D) cannot be labeled unfair as long as the tax revenues are used to fund public works projects.
The Euro, like the European Monetary Union which preceded it, is
A) opposed by most politicians. B) favored by most economists. C) likely to improve the use of monetary policy to deal with contractionary shocks which strike only one or two countries in Europe. D) all of the above. E) none of the above.
The most important determinant of the elasticity of supply is
A) whether the good is a durable good or a nondurable good. B) the price of the good. C) the time period firms have to adjust to the new price. D) the proportion of the good in the budget of consumers.
Answer the following statements true (T) or false (F)
1. The current base year for the CPI is 1985. 2. If a worker’s money wage increases at a faster pace than the CPI, his or her real wage will rise. 3. As income or spending patterns change substantially, it is wise to change the base year of the CPI. 4. The CPI does not necessarily make adjustments for improvement in the quality of goods and services in the market basket. 5. Real wages are determined by multiplying money wages by the CPI.