A bottle of wine can be produced in France with two labor hours, and in the United States with four labor hours. A pound of beef can be produced in France with one labor hour, and in the United States with ½ labor hours. Given this context, which of the following is true?
A. The United States has both a comparative and absolute advantage in the production of beef.
B. France has a comparative advantage in the production of beef.
C. The United States has an absolute but not a comparative advantage in the production of beef.
D. France has an absolute advantage in the production of beef.
Answer: A
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A) the price level falls. B) real GDP decreases. C) aggregate demand increases. D) aggregate supply increases. E) aggregate income decreases.
When the unemployment rate is ________ the natural unemployment rate, real GDP is ________
A) above; increasing B) above; above potential GDP C) below; above potential GDP D) below; increasing E) equal to; either equal to potential GDP or above potential GDP
Which of the following statements is consistent with the views of Joseph Schumpeter?
A) An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. B) Enforcement of antitrust laws is necessary to promote competition among firms. C) A lack of competition discourages firms from developing new technologies. D) Research and development by competitive firms is responsible for most technological changes.
In what situation would a macroeconomist find real gross domestic product most useful?
a. when reporting the figures for economic growth in the latest quarter b. when comparing economic growth during two different decades c. when measuring the change in the unemployment rate over the past decade d. when analyzing what factors affect changes in the price level over time