As you move up the production possibility frontier, the absolute value of the marginal rate of transformation
A. initially decreases, then increases.
B. increases.
C. initially increases, then decreases.
D. decreases.
Answer: B
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If an economy's depreciation is greater than its gross investment, then
A) net investment is negative and saving is negative. B) net investment is positive and saving is positive. C) net investment must equal saving. D) the economy's capital stock decreases. E) net investment is positive and saving is negative.
Because the United States has ________ advantage compared to China in producing airplanes, China can buy airplanes from the United States at a ________ opportunity cost than that at which China can produce them
A) comparative; lower B) comparative; higher C) absolute; lower D) absolute; higher E) None of the above because China will produce airplanes and sell them to the United States.