Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves indicate that
A. Mexico should specialize in the production of tomatoes.
B. Mexico should specialize in the production of machinery.
C. The United States should specialize in the production of machinery.
D. The United States should specialize in the production of both goods because it has an absolute advantage in the production of both.
Answer: B
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The "real business cycle" (RBC) model adapts the Lucas model by replacing its assumption of
A) demand shocks as primary generators of cycles. B) adaptive expectations. C) continuous market-clearing. D) slow wage and price adjustment.
An increase in the money supply will cause which of the following to occur?
A) a rightward shift of the aggregate supply curve B) a leftward shift of the aggregate demand curve C) a leftward shift of the aggregate supply curve D) a rightward shift of the aggregate demand curve
Identify the correct statement
a. National income accounting measures only the flow of output between different sectors of an economy. b. National income accounting summarizes the level of production in an economy over a decade. c. National income accounting explains diagrammatically the flow of goods and services and of money expenditures (income). d. National income accounting summarizes and categorizes the productive activity in an economy over a year. e. National income accounting measures the total money supply in an economy.
In order to ________, a government must increase spending and decrease taxation.
A. increase aggregate demand B. decrease aggregate demand C. increase aggregate supply D. decrease aggregate supply