Suppose Mexico has a comparative advantage relative to the United States in the manufacture of clothing and the United States has a comparative advantage in producing agricultural products. Which of the following is most likely to occur?
A) Mexico and the United States will not trade agricultural products or clothing.
B) Mexico will sell clothing to the United States and the United States will sell agricultural products to Mexico.
C) Mexico will sell agricultural products to the United States and Mexico will buy clothing from the United States.
D) Mexico will sell clothing to the United States but not buy any agricultural products from the United States.
Answer: B
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What will be an ideal response?
Small investors face
A) high transactions costs in financial markets. B) low transactions costs in financial markets. C) high transactions costs in financial intermediaries. D) high information costs in financial intermediaries.
In order for an increase in aggregate demand to raise Real GDP and the price level, the aggregate supply curve must be ____________________. If an increase in aggregate demand raises the price level but leaves Real GDP unchanged, the aggregate supply curve must be _____________________
A) upward-sloping; vertical B) upward-sloping; horizontal C) downward sloping; vertical D) vertical; upward-sloping E) vertical; downward-sloping
Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to news that next year's coffee harvest will be extremely good due to favorable weather conditions, you should expect:
A. the quantity of coffee demanded to decrease, but no shift in the demand curve. B. the demand curve to shift to D(B) in anticipation of lower future prices. C. the demand curve to shift to D(A) in anticipation of lower future prices. D. neither a change in quantity demanded nor a shift in demand because it will be a long time before next year's coffee crop is harvested.