Which of the following is true of an expansionary gap?
a. It develops when the expected price level exceeds the actual price level
b. In the long run, this gap will close when resource suppliers negotiate lower resource payments.
c. It measures the amount by which actual output falls short of the economy's potential.
d. In the long run, this gap will close when the short-run aggregate supply curve shifts rightward.
e. In the long run, this gap will close when resource suppliers negotiate higher resource payments.
e
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For country Gamma the opportunity cost for producing 1 computer is 10 tons of steel. For country Beta the opportunity cost for producing 1 computer is 6 tons of steel. Which country has the comparative advantage in the production of steel?
A) Beta B) Gamma C) Both have the comparative advantage in the production of steel. D) Neither country has the comparative advantage in the production of steel. E) More information is needed to determine which of the two nations has the comparative advantage.
During the financial crisis, which type of risk was the biggest problem faced by investment banks?
A) interest-rate risk B) currency risk C) hedging risk D) credit risk