For trade to work out properly, _____.
(A) Both parties should have an absolute advantage.
(B) Both parties should have a comparative advantage.
(C) One party should have an absolute advantage while the other should have a comparative advantage.
(D) Both parties should be making about the same profit from the exchange.
Ans: (D) Both parties should be making about the same profit from the exchange.
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The tax multiplier equals the change in ________ divided by the change in ________
A) consumption spending; taxes B) taxes; consumption spending C) taxes; equilibrium real GDP D) equilibrium real GDP; taxes
When policy makers attempt to focus on internal balance, they
A) must be talking only about domestic goals. B) must be talking about domestic and international goals. C) must consider both domestic policy and trade. D) Any of the above might be considered internal balance.