In general, individuals and nations should specialize in producing those goods for which they have a(n):
A. absolute advantage.
B. absolutely comparative advantage.
C. absolute advantage and a comparative advantage.
D. comparative advantage.
Answer: D
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All of the following would be included in aggregate expenditure except
A. social security payments. B. changes in inventories. C. sales of domestically produced goods to foreigners. D. purchases of services provided by government employees.
In the aggregate supply-aggregate demand model, if every person in the economy correctly anticipates the inflation rate, the unemployment rate will
A) be less than the natural rate of unemployment. B) be more than the natural rate of unemployment. C) equal zero. D) equal the natural rate of unemployment.
A straight-line production possibilities curve takes this shape because
A. resources are better suited for producing one output than another. B. resources are fixed. C. the opportunity cost of producing more of a good is decreasing. D. the opportunity cost of producing a good is constant.
Expansionary fiscal policy
A) can be effective in the short run. B) causes complete crowding out in the short run. C) is never effective because of crowding out. D) can be effective in the long run.