If France is capable of producing either cheese or wine or some combination of those two products, then France should:
A. produce the one for which it has a comparative advantage.
B. produce the one it is more efficient at producing.
C. produce the one for which it has a higher opportunity cost.
D. remain self-sufficient if it has the absolute advantage in the production of both.
Answer: A
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Which of the following is not true about a structural deficit?
A. It exists even if the economy is at full employment. B. It is determined in part by the actions of Congress. C. It definitely gets larger as unemployment increases. D. It is influenced by discretionary fiscal spending.
Equilibrium requires two conditions: (1) that income equals output in the economy, and (2) that in equilibrium, aggregate expenditure (or consumption in this example) equals output. Explain why both of these are assumed to be true.
What will be an ideal response?
The opportunity cost of a decision is the
A) value of the best alternative not chosen. B) value of all the alternatives not chosen. C) cost of making the wrong choice. D) cost incurred by others who are unhappy with your decision.
Employment of labor in a country other than the firm's home country is called
A) employing guest workers. B) outsourcing. C) employing non-naturalized workers. D) employing illegal aliens.