The United States imports DVD recorders from China and China imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that
A. the United States has comparative advantage in producing DVD recorders.
B. the United States has comparative advantage in producing computer chips.
C. the opportunity cost of producing DVD recorders in China is higher than that in the United States.
D. the opportunity cost of producing computer chips in the United States is higher than that in China.
Answer: B
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Higher steel prices will result in a shift in the supply curve of bicycles, and this will lead to
A. higher prices for bicycles. B. lower prices for bicycles. C. a shift in the demand curve for bicycles. D. a larger output of bicycles. E. no impact on the price of bicycles.
In the computation of GDP, Social Security payments count as
A) transfer payments and are included in GDP. B) transfer payments and are not included in GDP. C) government expenditure on goods and services and are included in GDP. D) government expenditure on goods and services and are not included in GDP.
If self-correction causes prices to fall less than nominal wages, both output and real wages will decrease
a. True b. False Indicate whether the statement is true or false
During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is
a. above the natural rate, so real GDP growth was likely low. b. above the natural rate, so real GDP growth was likely high. c. below the natural rate, so real GDP growth was likely low. d. below the natural rate, so real GDP growth was likely high.