In the real world, we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is
A) some countries have more resources than other countries.
B) production of most goods involves increasing opportunity costs.
C) tastes for many traded goods are similar in many countries because of globalization.
D) comparative advantage works better in theory than in practice.
B
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The CORRECT ranking of the four basic market structures from low (Herfindahl-Hirschaman Index) HHI to high HHI is
A) perfect competition, oligopoly, monopolistic competition, monopoly. B) monopoly, oligopoly, monopolistic competition, perfect competition. C) perfect competition, monopolistic competition, oligopoly, monopoly. D) monopoly, monopolistic competition, oligopoly, perfect competition.
Why is the demand for real money balances related to the nominal interest rate, rather than the real interest rate?
What will be an ideal response?
A decrease in real GDP relative to the natural rate of output creates an expansionary gap
a. True b. False Indicate whether the statement is true or false
"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:
A. the statement is backwards: increased demand leads to lower prices. B. a falling price of personal computers increases the quantity demanded, not demand. C. a change in the price of personal computers shifts the demand curve. D. a change in the price of personal computers shifts the supply curve.