In Figure 3-7, if we compare a move from point B to C with a move from point A to point B, we can see that
A. the opportunity cost of the move from B to C is higher than the opportunity cost of a move from A to B.
B. the opportunity cost of the move from B to C is lower than the opportunity cost of a move from A to B.
C. the opportunity cost of the move from B to C is equal to the opportunity cost of a move from A to B.
D. the production possibilities frontier has a positive slope.
Answer: A
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A prediction of the Ricardo-Barro effect is
A) a larger decrease in the real interest rate when the government runs a budget surplus. B) no effect on the real interest rate when the government runs a budget deficit. C) a larger decrease in investment when the government runs a budget deficit. D) a larger increase in the real interest rate when the government runs a budget deficit. E) a larger decrease in investment when the government runs a budget surplus.
Which of the following would be most likely to improve the standard of living of a less-developed country?
a. development of strong labor unions. b. more foreign investment, attracted by the expectation of economic and political stability. c. adoption of trade barriers (higher tariffs and quotas). d. widespread use of price controls to allocate goods and resources.
The political popularity of a tariff on imported goods that compete with products of a well-established domestic industry is
a. surprising since one would expect the political power of consumers to override the interests of even a well-established domestic industry. b. surprising since one would expect the economic harm resulting from tariffs to be well understood by voters. c. not surprising since such a tariff would generally benefit an easily recognized interest group at the expense of uninformed, uninterested consumers. d. not surprising since the tariff enables domestic producers and consumers to gain at the expense of foreigners.
Which component of AE (AD) makes the greatest contribution to GDP?
(a) Domestic household expenditure (C). (b) Exports (X). (c) Investment (I). (d) The net expenditure of central and local government (G).