Briefly explain how specialization and trade can benefit nations
What will be an ideal response?
When nations specialize in what they have a comparative advantage and then trade with other nations, their production possibilities curves move outward, which yields greater production and consumption possibilities.
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Why is money as a medium of exchange important in an economy?
What will be an ideal response?
At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is
A. 0.33. B. 1 C. 2 D. 4
How is cross-price elasticity of demand used to determine whether two goods are substitutes or complements?
What will be an ideal response?
The simplest money-creation multiplier is equal to
A) eD. B) H/e. C) 1/e. D) e/H. E) H/D.