What does international trade do to a nation’s domestic production possibilities?
What will be an ideal response?
International trade enables a nation to expand beyond its domestic production possibilities even if all domestic resources are fully employed. The reason for this outcome is that international trade allows a nation to make better use of its domestic resources to produce those goods and services for which it is a relatively low-cost producer and trade for (or import) those goods and services for which it is a relatively high-cost producer. By importing those goods for which it is a relatively high-cost producer, a nation makes better use of its domestic resources.
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Since 1990, the growth rate of real gross private investment in the United States has been relatively ________ and the growth rate of real personal consumption has been relatively ________
A) stable; stable B) stable; volatile C) volatile; stable D) volatile; volatile
When Susan Sneed paid Ralph Mentz three jars of homemade jam for repairing her rocking chair
a. GDP rose b. the money supply increased c. M1 rose but M2 fell d. currency was reduced e. an economic transaction occurred
A society's decision to produce more tanks may require it to forgo production of some cars
a. True b. False Indicate whether the statement is true or false
If the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should
a. impose a corrective tax on any firm producing a technology spillover. b. offer tax credits to consumers who are adversely affected by the new technology. c. subsidize producers by an amount equal to the value of the technology spillover. d. provide research grants to those firms not currently engaging in research to increase competition in the industry.