Why is trade based on comparative advantage?
What will be an ideal response?
The relevant cost of producing a good is how much of other goods must be sacrificed. The opportunity cost of a good is the economically important cost, and comparative advantage is based on opportunity costs. World output can be greater when countries specialize based on comparative advantage.
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If the banking system has a required reserve ratio of 25 percent, then the money multiplier is
A) 2. B) 4. C) 5. D) 10.
In the long run, an increase in the quantity of money ________ the value of money and ________ the price level
A) raises; does not change B) lowers; does not change C) lowers; lowers D) raises; raises E) lowers; raises
Market demand is
A) the total quantities demanded of all consumers of a particular item at given prices. B) a movement along the demand curve in response to the market. C) total equilibrium demand for the market. D) the demand for and supply of a good or service.
An example of a randomized controlled experiment is when
A) households receive a tax rebate in one year but not the other. B) one U.S. state increases minimum wages and an adjacent state does not, and employment differences are observed. C) random variables are controlled for by holding constant other factors. D) some 5th graders in a specific elementary school are allowed to use computers at school while others are not, and their end-of-year performance is compared holding constant other factors.