Specialization in trade will be economically efficient if it is based upon
A. national security needs.
B. comparative advantage.
C. absolute advantage.
D. government regulations.
Answer: B
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
If the level of interest rates increases, then the current value and price of a bond paying a fixed interest payment will
A) remain unchanged since its underlying value, the interest payment is fixed. B) fall since new bonds offer higher rates. C) rise since new bonds offer higher rates. D) first rise then fall as bond investors calculate the effects of the change in rates.
In Homer's Odyssey, Odysseus instructs his crew members to tie him to the mast of the ship so that he is not later tempted by the Siren's song. Which of the following irrational behaviors was he trying to avoid? a. People are overconfident
b. People behave in a time inconsistent manner. c. People give too much weight to a small number of vivid observations. d. People are reluctant to change their minds.
What is the best description of unemployment insurance benefits in the United States?
A. All unemployed workers receive the same wage-adjusted benefit regardless of what state they live in. B. All unemployed workers receive the same benefit regardless of what their previous job was. C. Unemployment benefits are based on family size and age. D. The dollar value of unemployment benefits is greater for low-wage workers than for high-wage workers. E. Unemployment benefits are a greater percentage of previous earnings for low-wage workers than for high-wage workers.