The discovery of new natural resources will cause
A. the economy to move closer to the production possibilities curve.
B. an upward movement along the curve.
C. the production possibilities curve to shift up and to the right.
D. the curve to shift back and to the left.
Answer: C
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If the world price of a good is below the no-trade domestic price, a country
A) will benefit from exporting the good. B) will benefit from importing the good. C) cannot benefit from trade. D) has a comparative advantage in the production of that good. E) will not engage in trade for that good.
Assume the demand function for a particular good can be written as P = 150 - 6Q. When P = 12, the point elasticity of demand equals 2.08
Indicate whether the statement is true or false
If Second National Bank has more rate-sensitive assets than rate-sensitive liabilities, it can reduce interest-rate risk with a swap that requires Second National to
A) pay fixed rate while receiving floating rate. B) receive fixed rate while paying floating rate. C) both receive and pay fixed rate. D) both receive and pay floating rate.
The accepted philosophy on U.S. federal deficits prior to the Great Depression was that: a. the budget should be balanced cyclically
b. a budget deficit does not matter as long as the economy is at full employment. c. the budget should be annually balanced. d. deficits dampen aggregate demand in the short run and reduce the federal debt. e. spending decreases during expansions and increases during recessions.