Ecuador has a comparative advantage in the production of bananas over the United States. Which of the following statements is true?
(A) Ecuador can produce bananas at a lower opportunity cost than the United States.
(B) Ecuador also has an absolute advantage in the production of bananas.
(C) The United States has an absolute advantage in the production of bananas.
(D) The United States cannot produce bananas.
Ans: (A) Ecuador can produce bananas at a lower opportunity cost than the United States.
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During the 1987-88 expansion period interest rates in the United States rose as did the rate of investment in the economy. These facts suggest
A) the simple accelerator effect and the effects of higher interest rates complemented each other to raise output growth. B) the simple accelerator effect and the effects of lower interest rates complemented each other to lower output growth. C) the effects of the accelerator were greater than those of increased interest rates. D) the effects of the accelerator were smaller than those of increased interest rates.
Preferential trade agreements have a beneficial trade-diversion effect when they reduce prices for traded goods and stimulate the volume of international trade
a. True b. False Indicate whether the statement is true or false