Hank requires 1 hour to cut 0.5 acres of grass and 1 hour to clean one house. His sister Holly requires 1 hour to cut 0.5 acres grass and 2 hours to clean one house. Which of the following statements is true?
a. Hank has a lower opportunity cost of cutting the grass.
b. Hank has a comparative advantage in both cutting the grass and cleaning the house.
c. Holly has a comparative advantage in cutting the grass.
d. Hank and Holly both have a comparative advantage in cutting the grass.
Answer: c. Holly has a comparative advantage in cutting the grass.
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When the U.S. price level increases, economists predict a:
A. movement down along the aggregate demand curve. B. shift straight up of the aggregate demand curve. C. shift to the right of the aggregate demand curve. D. decrease in expenditure.
Which one of the following policies might the Fed initiate if it wanted to increase the money supply?
a. sell government securities b. increase the reserve requirement c. increase the discount rate d. decrease the reserve requirement
In the figure above, firms
A) pay taxes directly to governments. B) sell goods and services to governments in goods markets. C) receive transfers from governments through factor markets. D) own factors of production. E) do all of the above.
The __________ serves as a practical reference point for all other securities markets
A) commercial paper market B) New York Stock Exchange C) over-the-counter market D) U.S. government securities market