A few economies have the interesting characteristic that exports are more than 100 percent of the economy's GDP. How is this possible?

What will be an ideal response?

An economy's exports and imports can vary independently of the economy's GDP, so long as its exports and imports are closely linked to each other. By the national income identity, Y = C + I + G + exports - imports. Rearranging, Y - exports = C + I + G - imports. If exports > Y, then imports must be greater than C + I + G. This occurs if a sufficient portion of imports either leave the economy as exports or are intermediate goods used in the production of exports.

Economics

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Action taken by the Fed to reduce the money supply will tend, all other things unchanged,

A) to reduce investment. B) to increase investment. C) to have no effect on net exports. D) to increase real GDP and the price level.

Economics

Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?

What will be an ideal response?

Economics