Critically evaluate the following statement. "If a country can produce a good using fewer inputs than other country then that means that country enjoys a comparative advantage."
What will be an ideal response?
This is not true. What is being described here is an absolute advantage. In order to have a comparative advantage all that is needed is that a country produce the good with a lower opportunity cost but not necessarily with fewer inputs.
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Use the following figure for the federal funds market to answer the next question.
If the Fed supplies $300 billion in reserves, the equilibrium federal funds rate is ________.
A. 5.0% B. 6.0% C. 5.5% D. Undeterminable with the information given.
When consumers are less confident about their jobs or incomes, they are more likely to
A) reduce purchases of durable goods than nondurable goods. B) increase consumption spending and decrease investment spending. C) reduce purchases of nondurable goods and increase purchases of durable goods. D) increase investment spending and decrease consumption spending.
The expenditure approach for the calculation of GDP includes spending on:
a. consumption, gross private domestic investment, government spending for goods and services, and net exports. b. consumption, investment, durable goods and exports. c. consumption, gross private domestic investment, government spending for goods and services, and exports. d. consumption, net private domestic investment, government spending for goods and services, and net exports.
Exhibit 15-6 Aggregate demand and supply model
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In Exhibit 15-6, if the aggregate demand curve is at AD1, in order to reach the full-employment levl of GDP the government should:
A. raise taxes to move to AD2. B. cut taxes to move to AD2. C. cut taxes to move to AD3. D. cut spending to move to AD2.