A country is said to have a comparative advantage in the production of a good when it:
a. has the lower opportunity cost of producing the good.
b. can produce the good using fewer resources than another country.
c. requires fewer labor hours to produce the good.
d. all of these.
QUESTION 2Classical economists believed that:
a. price flexibility automatically directs market economies to full employment.
b. budget deficits and surpluses were necessary for the control of economic fluctuations.
c. market economies suffer prolonged periods of recessions and depressions.
d. market economies are inherently unstable because of fluctuating aggregate demand.
QUESTION 3If a person is taxed 100 on an income of 1,000 . taxed 180 on an income of 2,000 . and taxed 220 on an income of 3,000 . this person is paying a:
a. progressive tax.
b. poll tax.
c. proportional tax.
d. regressive tax.
e. retro tax.
QUESTION 4The theory of comparative advantage suggests that nations should produce a good if they:
a. have the lowest opportunity cost.
b. have the lowest wages.
c. have the most resources.
d. can produce more of the good than any other nation.
QUESTION 5Who is hurt and who benefits from inflation? Why?
QUESTION 6The federal personal income tax was designed to be a:
a. progressive tax.
b. regressive tax.
c. proportional tax.
d. poll tax.
e. payroll tax.
QUESTION 7If the United States were to adopt a policy of free trade with European countries and Japan, this policy would:
a. help the United States and hurt the other countries because the United States has a larger population.
b. help all of the countries involved because every country would have a comparative advantage in the production of some goods.
c. hurt all of the countries involved because all the countries are capable of producing anything that could be produced in one of the other countries.
d. help the United States and hurt the other countries because the United States has more natural resources than the other countries.
QUESTION 8How is inflation typically measured? What are the different types of inflation? Why is it important to know which type of inflation we may be experiencing?
QUESTION 9A tax is proportional if, as a person's income rises, the:
a. tax rate is constant.
b. tax rate falls.
c. tax rate rises.
d. amount of the tax is constant.
e. amount of the tax falls.
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