Baumol and Blinder offer some reasons why countries trade with each other. List three of the reasons, and give an example of each to illustrate the reason
The three reasons are:
1 . Every country lacks some other vital resources that it can get only by trading with others. The example used in the text was Persian Gulf states, with oil but little farm land.
2 . Each country's climate, labor force, and other endowments make it a relatively efficient producer of some goods and an inefficient producer of other goods. Examples included U.S. attempts to grow bananas and coffee, rather than growing them in Honduras and Brazil; U.S. growing corn, rather than attempting to do so in Switzerland; and New Zealand employing labor skilled in agriculture, while Japan employs labor skilled in manufacturing.
3 . Specialization permits larger outputs, and can therefore offer economies of large-scale production. If several countries specialize, they can trade among themselves and offer low-cost items.
Considering all of these, one can conclude that trade is essential for the prosperity of the trading nations.
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If loans are $300,000 . demand deposits are $600,000 . and the legal reserve requirement is 40 percent, then excess reserves are
a. $360,000 b. $240,000 c. $120,000 d. $60,000 e. $30,000
One of the reasons that pollution problems are as large as they are is that
a. markets let individuals and firms deplete valuable resources without charging money for doing so. b. markets are incapable of incorporating valuable resources such as air and pure water. c. governments use resources without paying for them the way that individuals and firms must. d. markets are not an efficient means to address scarcity.
An important effect of fractional reserve banking is that bankers have
a. little control over total reserves. b. total control over the amount of lending in the economy. c. no control over the amount of reserves in the banking system. d. some discretion over the money supply.
Barter is
A) the exchange of money for goods and then the exchange of those goods for money. B) the exchange of money for money, or the exchange of money for stocks and bonds. C) the exchange of goods and services for goods and services without the use of money. D) any exchange, with or without the use of money, in which the participants negotiate (or barter) the price of the goods to be exchanged.