If a nation does not have an absolute advantage in producing anything, it
A. has no comparative advantage either.
B. will have a comparative advantage in the activity in which it is least inefficient.
C. will try to get along without trade.
D. will export raw materials and import finished products.
Answer: B
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Refer to Figure 7-5. With insurance and a third-party payer system, what is the amount of the deadweight loss?
A) $0 B) $2,500 C) $5,000 D) $24,000
Which of the following is a reason not to join a monetary union?
A) the loss of national identity B) the loss of seignorage C) a lack of fiscal integration D) All of these are reasons not to join.
Which of the following best describes the income velocity of money?
A) V = PMs B) V = Y C) V = PY/Ms D) V = Ms/PY