Which of the following statements is true of comparative advantage?
a. A nation can have a comparative advantage in the production of a good only if it has an absolute advantage in its production.
b. When a nation increases production in its area of comparative advantage and trades with another nation, both nations benefit.
c. When a nation produces a good at a higher opportunity cost than its trading partner, it is said to have a comparative advantage.
d. A nation imports the good in which it has a comparative advantage.
b
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The technology associated with manufacturing computers has advanced enormously. This change has led to the price of a computer ________ and the quantity ________
A) rising; increasing B) rising; decreasing C) falling; increasing D) falling; decreasing E) falling; not changing
With the policy rate set at zero, the rise in expected inflation will lead to a ________ in the real interest rate, which will cause investment spending and aggregate output to ________
A) fall; rise B) fall; fall C) rise; rise D) rise; fall
If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year, this would indicate that
a. the inflation rate during 2011 was 30 percent. b. the general level of prices during 2011 was 30 percent higher than during 2005. c. the inflation rate during 2011 was 130 percent. d. nominal GDP grew by 30 percent during 2011. e. real GDP was 30 percent higher in 2011 than 2005.
Which of the following statements is true about the impact of an increase in the price of lettuce?
a. The demand for lettuce will decrease b. The supply of lettuce will decrease. c. The equilibrium price and quantity of salad dressing will rise. d. The equilibrium price and quantity of salad dressing will fall. e. both a and d are true.