One of the major reasons why nations trade is that
a. nations choose to trade for largely unknown reasons.
b. resources are not equally distributed across the planet.
c. nations wish to exert cultural influence abroad.
d. nations wish to copy others, and need imports to study.
b
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Which of the following best describes efficiency in the demand and supply model?
a. The economy is receiving as much benefit as possible from its scarce resources and all the possible gains from trade have been achieved. b. The economy is receiving as much benefit as possible from its scarce resources but not achieving all the possible gains from trade. c. The economy is not receiving as much benefit as possible from its scarce resources but is getting all the possible gains from trade. d. The economy is not receiving as much benefit as possible from its scarce resources and not achieving all the possible gains from trade.
Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004 . One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as
a. inflation targeting. b. the monetary policy reaction lag. c. the time inconsistency of policy. d. the sacrifice ratio dilemma.
Answer the following statements true (T) or false (F)
1. The ability to produce a good or service at a lower opportunity cost than other producers face is known as comparative advantage. 2. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates. 3. One cause for the uneven standard of living throughout the world is the uneven distribution of resources. 4. The application of the principle of comparative advantage requires each of two trading partners to have an absolute advantage over the other in the production of some particular commodity.
Total surplus is
a. equal to consumer surplus minus producer surplus. b. equal to the total value to buyers minus the total cost to sellers. c. equal to consumers' willingness to pay plus producers' cost. d. greater than the sum of consumer surplus plus producer surplus.