Which of the following statements is true?
A) If a nation can produce more of a good than another nation can, it has a comparative advantage in the production of that good.
B) Comparative advantage results from a lower opportunity cost of production.
C) Absolute advantage results from having more resources.
D) Absolute advantage means that an individual or country can produce more of a particular good than can any other individual or country.
Ans: B) Comparative advantage results from a lower opportunity cost of production.
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The textbook refers to the following quotation from a Federal Reserve publication: "Trade is a win-win situation for all countries that participate
" But many firms and workers oppose free-trade policies and protests against globalization have become a regular occurrence at meetings of the World Trade Organization. If trade is a "win-win" situation, why is there strong opposition to free trade and globalization?
Which of the following describes the degree of control that the Fed has over the money supply?
A) The Fed has substantial control over the money supply. B) The Fed has absolute control over the money supply. C) The Fed has no control of the money supply. D) The Fed is not concerned about the level of the money supply, and does not attempt to control it.
If interest rates, prices, and output are all rising, then according to the Keynesian model, these changes must be caused by
a. an increase in aggregate supply. b. a shift to the right of the LM curve. c. a shift to the right of the LM curve. d. a shift up in the IS curve. e. none of the above.
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006 . Which of the following statements is correct?
a. The economy experienced inflation between 2004 and 2005 and between 2005 and 2006. b. The inflation rate was positive between 2004 and 2005, and it was negative between 2005 and 2006. c. The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005. d. All of the above are correct.