If a nation can produce a good or service at the lowest opportunity cost, then it
A) might export or import the good, depending on whether or not it has a comparative advantage in the production of the good.
B) can sell the product at a lower price than other nations.
C) will definitely import the good because it can beat other countries' prices.
D) does not want to export the good because the low cost means it makes only a low profit.
E) is best for the nation to not trade the good internationally.
B
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Refer to Figure 23-4. Potential GDP equals $500 billion. The economy is currently producing GDP1 which is equal to $450 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?
A) -$40 billion B) -$10 billion C) $10 billion D) $40 billion
The economy is in long-run equilibrium when there is an incorrectly anticipated increase in aggregate demand brought about by expansionary monetary policy. Specifically, aggregate demand increases by less than people anticipate (bias upward). According to new classical theory, the price level will __________ and Real GDP will __________ in the short run. In the long run, the price level will be
__________ than it was before aggregate demand increased. A) rise; rise; lower B) rise; fall; higher C) rise; fall; higher D) fall; rise; lower E) rise; rise; higher