The saying "What's that got to do with the price of tea?" reflects
A) two markets where general equilibrium analysis would be most useful.
B) two markets where general equilibrium analysis likely won't be very useful.
C) two markets where the products are clearly closely related.
D) two markets where firms are incredibly greedy.
B
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In 1990, Britain joined the ERM. If the German Bundesbank increased interest rates, what will Britain have to do in order to maintain its exchange rate peg?
A) The British would be forced to increase their interest rates. B) The British would increase their money supply. C) The British would have to lower their interest rates. D) The British government would have to use expansionary fiscal policy.
Two nations have the following production capacity given their endowment of resources. Country A can produce 40 units of beer or 90 units of pizzas. Country B can produce 120 units of beer or 70 units of pizzas. Which of the following statements is most appropriate to decide how these countries should specialize?
A. Country B has an absolute advantage in both products. B. Country A has a comparative advantage in pizza and country B has a comparative advantage in beer. C. Country A has no comparative advantage and country B has a comparative advantage in beer. D. Country A has a comparative advantage in beer and country B has a comparative advantage in pizzas.