What assumptions are made concerning wages and prices in a classical economic model?
What will be an ideal response?
Wages and prices adjust freely to changes in supply and demand.
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An import quota on sugar
A) increases the imports of sugar and lowers its price. B) increases the imports of sugar and raises its price. C) increases the demand for sugar and raises its price. D) decreases the imports of sugar and raises its price.
In a small economy in 2016, aggregate expenditure was $850 million while GDP that year was $800 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?
A) Aggregate expenditure is always less than GDP in developing countries. B) Aggregate expenditure is always less than GDP in developed countries. C) Firm investment in inventories was less than anticipated in 2016. D) Firm investment in inventories was greater than anticipated in 2016.
In a two-person economy, Adam and Brandon both produce corn and cars. Adam's marginal cost of producing a car is 50 tons of corn, while Brandon's marginal cost is 70 tons of corn. In this economy, Brandon should produce cars and Adam should produce corn
Indicate whether the statement is true or false
Which of the following would both make a country's real exchange rate rise?
a. its budget deficit increases and bonds issued in the country become riskier b. bonds issued in that country become riskier and it imposes an import quota c. it imposes an import quota and the budget deficit increases d. None of the above are correct.