Is it possible for a country to have an absolute disadvantage and a comparative advantage in the production of a good?
A. No, these are incompatible on theoretical grounds.
B. No, theory prevents it, but some economists claim it could occur.
C. Yes, this situation can occur.
D. Yes, in theory, although not in reality.
Answer: C
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Inflation is
A) a decline in the total purchasing power of an economy. B) a decrease in the amount of other goods that a unit of money will purchase. C) a fall in people's real incomes. D) an increase in the cost of living. E) all of the above.
One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished. B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. C) the high salaries pharmaceutical firms pay to scientists and doctors make their labor costs higher than for any other business. Profits from patents are needed to pay these labor costs. D) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes.
Unexpected discoveries of mineral reserves will ordinarily cause the price of these minerals to increase.
Answer the following statement true (T) or false (F)
If the government knew the precise values of the multiplier and potential income, fine-tuning the economy would
A. be much easier, but mistakes would still occur occasionally. B. still be very difficult. C. be possible. D. be more difficult.