The table below shows the units of land and labor required to produce a unit of bread and cheese respectively in Country X. If Country X is land-abundant, the opening up of free trade would result in 1 Unit of Bread1 Unit of CheeseLabor Input5 units20 unitsLand Input4 units10 units
A. a decline in the production of bread but an increase in the production of cheese in the country.
B. an increase in the production of both bread and cheese in the country, but production of cheese will rise at a lesser pace than the production of bread.
C. a decline in the production of both bread and cheese in the country.
D. an increase in the production of bread but a decline in the production of cheese in the country.
Answer: D
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According to William Niskanen's model of bureaucracy, Congress tends to approve a bureau's budget at a level where
a. the marginal value of the last unit of the bureau's output is greater than the marginal cost. b. the marginal cost of the last unit of the bureau's output is greater than the marginal value. c. the marginal value of the last unit of the bureau's output equals the marginal cost. d. the marginal cost of the last unit of the bureau's output is zero.
Figure 16.5Figure 16.5 depicts the market effects of a gasoline tax. What is the amount of gasoline tax per gallon?
A. PA - PB B. PB - PC C. PA - PC D. There is not sufficient information.
Suppose the income-consumption curve for goods X and Y is upward sloping. If the price of good Y increases and the income-consumption curve rotates in clockwise fashion, then we know that:
A) X and Y are complements. B) X and Y are both inferior goods. C) X and Y are substitutes . D) Y is an inferior good.
When the macro equilibrium is above full employment, fiscal policy should be used to shift aggregate demand by the amount of
A. The difference between saving and investment. B. The AD excess, which also allows for price level changes. C. The difference between desired saving and desired investment. D. None of the choices are correct.