If two individuals have identical schooling, their incomes will be equal.
Answer the following statement true (T) or false (F)
False
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Empirically, there is a close positive relationship between domestic savings and investment. This is consistent with what we should expect to observe in
a. a closed economy. b. the Mundell-Flemming model with perfect capital mobility. c. the Mundell-Flemming model with perfect capital mobility and flexible exchange rates. d. the Mundell-Flemming model with perfect capital mobility and fixed exchange rates. e. none of the above.
Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?
What will be an ideal response?
The hands-off view of the classical school rests on which of the following two simple propositions about markets?
a. Demand creates its own supply and markets are basically competitive. b. Industrial policy is inevitable and all prices are flexible. c. Market failure occurs and prices are rigid. d. Wages are sticky downward and market failure is inevitable. e. Markets are basically competitive and prices are flexible.
Bogo has just discovered that the marginal revenue product generated by the last worker hired was $125 while the marginal factor cost was $110. What should Bogo do?
A. Leave the level of production unchanged. B. Increase the amount produced. C. Reduce the amount produced. D. Collect more information before making a decision.