Assume that there are two nations, Alpha and Beta. Each nation produces two products, wheat and steel. Alpha has a comparative advantage in the production of wheat. If the two nations trade, the trade price of wheat in terms of steel will be
A. greater than the domestic opportunity cost of wheat in both nations.
B. less than the domestic opportunity cost of wheat in both nations.
C. less than the domestic opportunity cost of wheat in Alpha and greater than the domestic opportunity cost of wheat in Beta.
D. greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta.
Answer: D
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Research by Reinhart and Rogoff indicate that most of the increase in national debt as a result of a financial crisis is due to
A) government bail outs of financial institutions. B) increase spending on social welfare programs. C) government stimulus programs. D) sharp declines in tax revenues.
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A) price fixing B) market division C) bid rigging D) monopolization
A medium of exchange must be
a. approved by the government b. socially acceptable in exchange for goods and services c. easy to reproduce d. used to eliminate specialization and the division of labor e. used when a system of barter exists