To maximize worldwide gains from trade, the country that should produce a good is the country that
a. has the lowest opportunity cost of producing it
b. can produce that good using the fewest resources
c. will produce that good using the most expensive resources
d. has the most desire for that good
e. has produced that good in the past
A
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Inflation distorts relative prices. What does this mean and why does it impose a cost on society?
Figure 1A.2Refer to Figure 1A.2. The slope between points a and c is:
A. -5. B. -6. C. 10. D. 30.
The real business cycle theory
A. indicates that supply side shocks cause most business cycles. B. indicates that frequent fiscal policy actions cause most business cycles. C. indicates that demand side shocks cause most business cycles. D. indicates that unanticipated changes in the money supply cause most business cycles.
Which of the following is most likely to occur in the labor market during a recession?
A. The growth rate of real wages declines. B. New entrants to the labor market have an easier time finding jobs. C. Bonuses and promotions become more frequent. D. The supply of labor increases dramatically.