Economists believe that trade is necessary for prosperity because
a. every country lacks some vital resources that it can get only by trade.
b. each country's climate makes it a relatively efficient producer of some goods, and an inefficient producer of other goods.
c. specialization permits large outputs and can produce economies of scale.
d. All of the above are correct.
d
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A country's financial account balance decreases if
A) its current account balance increases. B) its income payment inflows on foreign assets decrease. C) its domestic residents working abroad reduce the income they send home to their families. D) foreigners increase their purchases of its existing assets.
One difference between moral hazard and adverse selection is
a. Moral hazard has to do with unobservable characteristics of individuals b. Adverse selection has to do with unobservable actions of individuals c. Adverse selection occurs when individuals least appropriate for positions are most likely to apply for them d. Adverse selection is when you choose the wrong answer on a test