Answer the following questions true (T) or false (F)
1. The basis for trade is comparative advantage, not absolute advantage.
2. If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods.
3. In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it cannot benefit by trading with the other country.
1. TRUE
2. FALSE
3. FALSE
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In a market system, the primary instruments used to coordinate economic activity are
A. plans. B. prices. C. input-output analyses. D. quantities.
The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 2008
2007 2008 Loans $83 $78 Reserves $4 $5 Deposits $114 $95 The data show that Sun Trust A) increased its reserve ratio to 5.3 percent over the 12 months. B) increased its reserve ratio to 6.4 percent over the 12 months. C) has fewer excess reserves in 2008. D) faced a higher currency drain ratio in 2008.
Which of the following characterizes the Fed's ability to prevent recessions?
A) The Fed is incapable of changing aggregate demand through its monetary policy tools. B) The Fed is able to "fine tune" the economy and entirely eliminate recessions. C) The Fed is able to eliminate the business cycle and achieve absolute price stability. D) The Fed is able to keep a recession shorter and milder than it would otherwise be.
As a result of recent empirical research, there has been a convergence of Keynesian and monetarist opinion to the view that
A) money is all that matters. B) money does matter. C) money does not matter. D) fiscal policy is all that matters.