In some models of international trade, economists assume there are only two goods and two countries. This assumption is an example of:
a. positive economics.
b. a simplifying assumption.
c. normative economics.
d. a critical assumption.
Answer: b. a simplifying assumption.
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Refer to Figure 8A.2. An increase in the saving rate is represented by
A) a movement from e2 to e1. B) shifting from s1Y to s2Y. C) a movement from K1 to e1. D) shifting from s2Y to dK.
Even though points inside a production possibilities curve are attainable, why are they not preferred?
What will be an ideal response?
The price elasticity of demand for a horizontal demand curve is:
a. 0. b. -1. c. 1. d. - infinity.
The national debt is defined as the total
a. amount that U.S. citizens owe to foreigners. b. value that U.S. citizens borrow from foreigners during any time period. c. value of government's indebtedness at any moment in time. d. amount by which government's expenditures exceed receipts during any time period.