The figure below represents the domestic market for wheat in a small country. Imports of wheat are prohibited.With an export subsidy of $20 per bushel, the cost to the government of paying the export subsidy is

If potential GDP increases, what happens to aggregate supply? Does the LAS curve shift or is there a movement along the LAS curve? Does the SAS curve shift or is there a movement along the SAS curve?

What will be an ideal response?

Refer to the table above. Based on the given information, we see that:

The table below shows the output (either machines or wine) that each unit of input in France and Germany can produce:



A. France has an absolute advantage over Germany in producing either output
B. Germany has an absolute disadvantage in producing wine
C. Germany has no absolute advantage over France in producing either output
D. France will see no economic basis for trading with Germany