Refer to Figure 26-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B
A) the unemployment rate is greater than the natural rate of unemployment.
B) incomes and profits are falling.
C) there is pressure on wages and prices to fall.
D) firms are producing above capacity.
D
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Which of the following events is least likely to take place under a fixed exchange rate system?
A) an increased volume of trade because of a decline in exchange rate volatility B) increased cross-border capital flows C) increase in cost of trade because of higher transaction costs D) increased cross-border labor flows in integrated economies
Figure 34-2
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In Figure 34-2,
A. the opportunity cost of 1 unit of wheat in the United States is a 2/3 unit of petroleum. B. the opportunity cost of 1 unit of wheat in Mexico is a 2/3 unit of petroleum. C. the opportunity cost of wheat is higher in the United States than it is in Mexico. D. the United States has a comparative advantage over Mexico in the production of petroleum.