The law of comparative advantage states that
A. countries grow fastest if exports exceed imports, with payment surpluses being received in gold.
B. mutually beneficial trade can always take place between two countries whose pre-trade relative opportunity costs differ.
C. two countries can both gain from trade only when they have very different tastes and preferences.
D. trade benefits a country only if it has comparative advantages in all goods and services.
B. mutually beneficial trade can always take place between two countries whose pre-trade relative opportunity costs differ.
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If the unemployment rate is less than the natural unemployment rate, then
A) there is no frictional unemployment. B) cyclical unemployment is greater than zero. C) real GDP is less than potential GDP. D) real GDP is greater than potential GDP. E) frictional unemployment is negative.
Suppose the price of capital and labor remain constant. As a firm's expenditures for capital and labor increase, its isocost line
A) rotates outward on the Y-intercept. B) shifts in parallel to the original isocost line. C) rotates outward on the X-intercept. D) shifts out parallel to the original isocost line.