Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state that
A) the two nations should not specialize in the production of goods.
B) specialization can lead to an increase in the production of all goods.
C) specialization can lead to an increase in the consumption of all goods.
D) neither country has a comparative advantage in the production of any good.
C
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In a perfectly competitive market, if supply and demand fully reflect all of the costs and benefits associated with production and consumption, then total economic surplus is maximized when:
A. consumer surplus and producer surplus are equal. B. price controls keep prices low enough that most consumers can purchase the item. C. consumer surplus is greater than producer surplus. D. the market is in equilibrium.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
When a currency depreciates, its value has
A) been fixed against the value of another country. B) fallen against another currency. C) remained constant against that of another currency. D) risen against another currency. E) fluctuated around a particular value.
When a market clearing price is determined
A) the exchange between buyers and sellers is voluntary. B) the exchange between buyers and sellers is directed by outside factors such as the government. C) the exchange between buyers and sellers benefits only the buyers. D) the exchange between buyers and sellers benefits only the sellers.