Two nations with differing comparative advantages will be able to consume more if they specialize and trade with each other than if they did not specialize or trade with each other.
Answer the following statement true (T) or false (F)
True
Trade shifts production of each good to the country or countries with the lowest opportunity costs. As a consequence, total production rises and hence so does total consumption, allowing each country to consume more than if it did not trade.
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The change in fixed costs over the short run is seen in the behavior of marginal costs
Indicate whether the statement is true or false
Your spouse complains that her 6% raise this year will not keep up with the increase in prices. In other words, she is unable to buy the same basket of goods with her 6% raise. Therefore, she believes that her
a. nominal income and real income increased. b. nominal income increased, but their real income decreased. c. nominal income and real income decreased. d. nominal income decreased, but their real income increased.
When a nation removes tariffs on imported products that nation will
A. experience lower prices and consume higher quantities. B. experience higher prices and consume higher quantities. C. experience higher prices and consume lower quantities. D. experience lower prices and consume lower quantities.
If investment spending is relatively insensitive to changes in the interest rate, then the most effective expansionary policy would be
A. a reduction in required reserves. B. Fed purchases of government securities. C. a personal income tax increase. D. a personal income tax cut.