Consider a world of two countries facing opportunity costs and producing only wheat and cloth. In one hour, residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of cloth, whereas residents of Country B can produce a maximum
of either 0.3 unit of wheat or 0.4 unit of cloth. Country B should export
A) wheat and cloth; country A should not export anything.
B) wheat and country A should export cloth.
C) nothing and country A should export both wheat and cloth.
D) cloth and country A should export wheat.
Answer: D
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Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show
A) the rate of inflation as a horizontal line. B) that inflation was following a decreasing trend line. C) that inflation had a positive trend. D) that inflation had a negative trend.
It is well documented that traveling on our nation's highways at lower speeds saves money on fuel and reduces accidents. Assume that a driver understands this but is unwilling to drive slower until he observes everyone else doing it
Can you make a parallel between this attitude and the case where countries will refuse to lower their tariffs unless their trading partners do the same?