Suppose production in Spain and Portugal are not subject to the law of increasing cost and that Spain specializes in shoes while Portugal specializes in meat. If the opportunity cost of producing a pair of shoes in Spain is 3 pounds of meat, then we know that
a. Portugal consumes more meat than shoes
b. Spain consumes more meat than shoes
c. The opportunity cost of producing shoes in Portugal is more than 3 meats
d. The opportunity cost of producing shoes in Portugal is less than 3 meats
e. The opportunity cost of producing meat in Portugal must be 3 shoes
C
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A minimum wage set above the equilibrium wage rate is a price
A) ceiling that results in a shortage of low-skilled labor. B) ceiling that results in a surplus of low-skilled labor. C) floor that results in a shortage of low-skilled labor. D) floor that results in a surplus of low-skilled labor.
Given the assumptions of the classical model
A) the economy will often experience recessions and expansions. B) expansion will be the normal condition, but recessions will often be severe and require government intervention. C) the macroeconomy is erratic, and problems will often be increased over time. D) the market is a self-correcting mechanism.
Recently, the level of GDP has declined by $60 billion in an economy where the marginal propensity to consume is 0.75. Aggregate expenditures must have fallen by:
A. $45 billion B. $30 billion C. $15 billion D. $60 billion
If the economy has a structural deficit of $25 billion and a cyclical deficit of $75, we can conclude that the current budget deficit is ________ billion
A) $75 B) $25 C) $0 D) $50 E) $100