Operation on the basis of comparative advantages implies which of the following?
(a) Countries allocate their resources across all sectors regardless of opportunity costs.
(b) Countries will specialize even if they can produce everything.
(c) Countries not efficient in any production should not trade.
(d) none of the above.
(b)
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
When the average propensity to save (APS) is 0.20, then this means
A) people are spending 60 percent of their disposable income and investing the remaining 20 percent. B) people are spending 20 percent of their disposable income. C) people are spending 80 percent of their disposable income. D) people are saving $0.20 of the last dollar earned.
Someone who is risk-neutral has
A) diminishing marginal utility of wealth. B) constant marginal utility of wealth. C) increasing marginal utility of wealth. D) less marginal utility of wealth than someone who is risk-preferring.
If the economy is operating at an unemployment rate above the full employment rate,
a. actual output is above potential output b. actual output is below potential output c. frictional unemployment has been eliminated d. structural unemployment has been eliminated e. actual output equals potential output