Answer the next question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia:Latalia's Production Possibilities ABCDEPork (tons)43210Beans (tons)05101520Trombonia's Production Possibilities ABCDEPork (tons)86420Beans (tons)06121824If these two nations specialize on the basis of comparative advantage
A. Trombonia will produce beans and Latalia will produce pork.
B. Latalia will produce beans and Trombonia will produce pork.
C. Trombonia will produce both beans and pork.
D. Latalia will produce both beans and pork and Trombonia will produce neither.
Answer: B
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Because the presence of a warranty for a good is a signal that the good is of high quality,
A) consumers are willing and able to pay more for a good that carries a warranty. B) consumers are willing to buy goods if and only if the goods come with warranties. C) producers do not need to charge extra for warranties. D) producers can use warranties to sort out high-risk customers. E) producers must make warranties available on all goods.
In the above figure, if we begin at S1 and the Fed sells bonds
A) the price of bonds rises, and so does the interest rate. B) the price of bonds falls, and the interest rate rises. C) the price of bonds rises, and the interest rate falls. D) the price of bonds falls, and so does the interest rate.
If the Federal Reserve targets the money supply, and the money demand curve shifts to the left, then the Fed
A) can maintain the money supply target, but at a lower interest rate. B) can maintain the money supply target with no change in the interest rate. C) can maintain the money supply target, but at a higher interest rate. D) cannot maintain the money supply target.
The number of Mexican pesos required to buy the same number of goods and services in Mexico as one U.S. dollar buys in the United States is a description of the ________ exchange rate
A) actual B) real C) purchasing power parity D) chain-weighted