Which of the following statements is true about comparative advantage?
a. Comparative advantage exists whenever one person, firm, or nation can do something at higher opportunity costs than some other individual, firm, or nation.
b. Comparative advantage is interesting theoretically, but it is not relevant when evaluating real-world economic conditions.
c. Low income countries cannot possibly have a comparative advantage in the production of any good or service because of the relatively low literacy rate.
d. Comparative advantage exists whenever one person, firm, or nation can do something at lower opportunity costs than some other individual, firm, or nation.
e. Only technologically advanced economies can have a comparative advantage in the production of a good or service.
d
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In a dynamic game, rational players
A) will reject outcomes that are not subgame perfect. B) use backward induction to determine best responses. C) have strategies that select a Nash equilibrium in the game as a whole. D) All of the above.
The exchange rate is the:
A. value of one currency expressed in terms of another currency. B. reciprocal of the currency's real value. C. value of one currency expressed in terms of the goods and services it can buy. D. value of currency adjusted for inflation.
An advantage of fixed exchange rates for a country that suffers from bouts of high inflation is:
A. it makes imports less expensive. B. it unties policymakers' hands so they can alter the reserves of the banking system as needed. C. policymakers will have increased control over domestic interest rates. D. it establishes a credible low inflation policy.
Economists assume simply that tastes are given and are relatively stable
Indicate whether the statement is true or false