The table above represents five points on the production possibility frontier for the small country of Baca, which produces only rugs (measured in thousands) and wheat (measured in thousands of bushels): If the economy is currently at point A,
what is the opportunity cost of producing an additional 10,000 bushels of wheat? If the economy is currently at point B, what is the opportunity cost of producing an additional 10,000 bushels of wheat? What if the economy is currently at point D?
If the economy is currently at point A, the opportunity cost of producing an additional 10,000 bushels of wheat is 5,000 rugs. If the economy is currently at point B, the opportunity cost of producing an additional 10,000 bushels of wheat is 10,000 rugs. If the economy is currently at point D, the opportunity cost of producing an additional 10,000 bushels of wheat is 20,000 rugs.
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A decrease in the rate of interest, other things being equal, will cause a:
a. rightward shift of the investment demand curve. b. movement upward along the investment demand curve. c. movement downward along the investment demand curve. d. leftward shift of the investment demand curve.
What is the difference between a solution to a game in a pure strategy and a mixed strategy situation?
If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?
a. P = e/P b. 1 = e/P c. e = P/P d. None of the above is correct.
If trade policies change, then we would expect aggregate expenditure to:
A. remain constant. B. depends on the policy. C. decrease. D. increase.