Comparisons of GDP levels across countries are least accurate when:
A. prices differ across countries and nonmarket activities are a large part of total economic activity.
B. purchasing power parity prevails.
C. prices differ across countries.
D. nonmarket activities are a small part of total economic activity.
Answer: A
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Using the HO model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor intensive,
A) Mexico will produce more soybeans once trade is introduced. B) the United States will produce more avocados once trade is introduced. C) avocado prices in the United States will fall once trade begins. D) soybean prices in Mexico will rise once trade begins.
The Fed's quantitative easing is to purchase ________ to affect credit spreads
A) long-term securities B) short-term securities C) both long-term and short-term securities D) private assets
When there is a resource for which property rights are not well defined and there is a difference between private costs and social costs, then all but which of the following is a way to close the difference?
A) the free market system B) taxation C) subsidization D) regulation
During the mid- to late 1990s, the incentives for investment spending resulted in boosts in
A. aggregate demand. B. personal consumption expenditures. C. corporate tax revenue. D. capital gain tax revenue.