For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?
a. The opportunity cost of producing watches is lower in Denmark.
b. The opportunity cost of producing cheese is lower in Denmark.
c. The opportunity cost of producing watches is identical in both countries.
d. It is impossible to compare opportunity costs because the two countries use different currencies.
e. In Germany the opportunity cost of producing one pound of cheese is one watch.
A
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a. Real interest rates can be either positive or negative, but nominal interest rates must be positive. b. Real interest rates and nominal interest rates must be positive. c. Real interest rates must be positive, but nominal interest rates can be either positive or negative. d. Real interest rates and nominal interest rates can be either positive or negative.
In contrast to the post–World War II period, before 1940 the government
A. actively intervened in the economy for stabilization purposes. B. used aggregate demand management to avoid recessions. C. rarely intervened in the economy to influence inflation or unemployment rates. D. used government ownership to guarantee full employment.