If a nation has an absolute advantage in the production of some commodity, it
a. can gain only if it has a comparative advantage in the commodity.
b. may still gain from trade in the commodity.
c. cannot gain from trade in the commodity.
d. cannot gain unless it has an absolute advantage in every other commodity.
b
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Use the following graph to answer the next question.
If the economy is currently in equilibrium at output level Q2, but full-employment output is at level Q1, which of the following fiscal policy actions would be the most effective at bringing the economy back to its full-employment output level?
A. Increase taxes and increase government purchases. B. Reduce government purchases and cut taxes. C. Cut taxes. D. Increase taxes.
Another expression for disposable income would be
a. income left over after subtracting deductions such as 401Ks and health insurance b. income left over after subtracting taxes c. income left over after subtracting fixed payments like rent or car payments d. income left over after subtracting all required spending items such as food, utilities, etc. e. income left over after subtracting transfer payments
A change in government purchases shifts the aggregate demand curve by an amount equal to the
A) change in consumption X marginal propensity to consume. B) change in government purchases X money multiplier. C) change in government purchases X spending multiplier. D) change in the spending multiplier X change in government purchases.
If supply is unchanged, a rightward shift in the demand curve for gourmet ice cream will result in:
a) An increase in equilibrium quantity and a lower equilibrium price. b) A decrease in equilibrium quantity and a higher equilibrium price. c) A decrease in equilibrium quantity and a lower equilibrium price. d) An increase in equilibrium quantity and a higher equilibrium price.