What does the law of comparative advantage indicate?
What will be an ideal response?
Specialization and exchange will permit trading partners to maximize their joint output.
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What are consumption taxes, and what is an example of a consumption tax?
What will be an ideal response?
Which of the following reduces the money multiplier?
A) Banks loan all their excess reserves. B) Bank customers hold some of the loan proceeds as currency outside the banking system. C) The Fed reduces the required reserve ratio. D) Banks impose a currency drain on bank customers. E) The Fed sells U.S. government securities.
All of the following are examples of spending on factors of production in the circular flow model except
A) Bima hires two students to work at his ice-cream store. B) Iris buys a dozen roses for her mother's birthday. C) "Get Fit Together" purchases 3 new treadmills for its gym. D) The Banyan Tree rents a much larger property so that it can add a restaurant to its facilities.
If Priscilla regards cheese and crackers as perfect complements, then
a. her indifference curves slope upward. b. her indifference curves are straight lines. c. Priscilla prefers lower indifference curves to higher ones. d. for Priscilla a bundle of 5 crackers and 5 ounces of cheese is just as good as a bundle of 5 crackers and 8 ounces of cheese.