Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing
A. both cheese and cars.
B. cheese.
C. neither cheese nor cars.
D. cars.
Answer: D
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If the dollar appreciates and the U.S. AD curve shifts leftward by an amount greater than the U.S. SRAS curve shifts rightward, then Real GDP will _____________________ and the price level will _____________________
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
Which of the following statements is true?
A. All people in poverty are on welfare. B. Unemployment compensation is an example of an in-kind transfer. C. Temporary Assistance to Needy Families (TANF) is an example of a cash payment made by government to the impoverished. D. After cash assistance and in-kind transfers are considered the distribution of income in the United States is more unequal.
When numerous Japanese companies buy $100,000,000 worth of goods or services from U.S. producers, ceteris paribus, there will be
A) appreciation in the value of the yen against the dollar. B) depreciation in the value of the yen against the dollar. C) depreciation of the dollar against the yen. D) no change in values of the currencies.
If the price of a product increases, then
A. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. B. the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases. C. the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. D. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases.