Suppose that labor is the only productive resource needed. Scotland has a comparative advantage in producing firewood, while Iceland has a comparative advantage in producing wool. If the two nations trade with each other,
A. Scotland should export wool and Iceland should export firewood.
B. Scotland should export both wool and firewood.
C. Scotland should export firewood and Iceland should export wool.
D. Iceland should export both wool and firewood.
C. Scotland should export firewood and Iceland should export wool.
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Classical growth theory predicts
A) a slowdown in population growth over time. B) sustained increases in economic growth in the long run. C) sustained increases in the standard of living in the long run. D) real GDP per person will remain at the subsistence level over time. E) the population growth rate slows as real GDP per person rises.
The amount of income a consumer has to spend on goods and services is known as
A) purchasing power. B) effective demand. C) a budget constraint. D) wealth.