Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.

For country North, the opportunity cost incurred when 3 tractors are produced is 21 watches. For country South, the opportunity cost incurred when 5 tractors are produced is 100 watches

Which country has the comparative advantage in the production of tractors? A) South B) North C) Both have the comparative advantage in the production of tractors. D) Neither country has the comparative advantage in the production of tractors. E) More information is needed about which country has the comparative advantage in the production of watches.

The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 2.40 Brazilian reals per dollar

A) there will be a shortage of dollars. B) $40 billion dollars will be demanded. C) $40 billion dollars will be supplied. D) there will be a surplus of dollars.