The gains from specialization and trade are based on comparative advantage.
Indicate whether the statement is true or false.
Answer: True.
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One of the principles behind the concept of the circular flow is that
A) in every economic exchange, the seller receives exactly the same amount that the buyer spends. B) in every economic exchange, the seller receives less than the amount that the buyer spends. C) in exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets the seller receives more than the buyer spends. D) the seller of goods receives exactly the same amount that the buyer spends, but the seller of resources receives less than the buyer spends.
Which of the following is a surplus item in the U.S. current account?
A) The U.S. government reduces the tariff rates on some imported goods. B) IBM pays dividends to British shareholders. C) Finn vodka becomes more popular in the United States. D) The U.S. government cuts back on military personnel stationed in S. Korea.
Suppose the consumer price index (CPI) stands at 250 this year. If the inflation rate is 10 percent, then next year's CPI will equal:
a. 250. b. 260. c. 275. d. 500.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.