Answer the following statements true (T) or false (F)
1. In terms of combined volume of exports and imports, the largest trading partner of the United States is China.
2. The combined total of exports plus imports accounted for more than 50% of U.S. GDP in 2012.
3. The U.S. has a trade deficit in goods, but a trade surplus in services.
4. When a country has a comparative advantage in some product, it has a higher domestic opportunity cost, but can charge a lower price for the product.
5. Nation A can produce either 6 units of steel or 8 units of wheat. Nation B can produce either 10 units of steel or 10 units of wheat. These data suggest that Nation A has the comparative advantage in producing wheat.
1. F
2. F
3. T
4. F
5. T
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Refer to Figure 17-2. Suppose the economy is at point A. The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A. Which of the following will occur?
A) Inflation will accelerate in the long run. B) Unemployment will accelerate in the long run. C) Inflationary expectations will decline. D) Unemployment will rise above the natural rate.
Many people favor stronger gun control as a method of reducing murder rates. Others argue that criminals will get guns despite stronger laws restricting them. Assume those seeking gun control recognize this argument but they still push for gun control. They most likely believe that
A. criminals fall prey to the Weber-Fechner law. B. people are rational but are subject to the self control pitfall in moments of high passion. C. murders are usually premeditated rational acts based on cost-benefit analysis. D. the sophomore jinx does not apply to murderers.