After the American Civil War, many prominent Southerners lamented the fact that the South "overproduced" cotton and "underproduced" food. In fact, the South did import a very large percentage of its food. Nevertheless, rather than reduce cotton production and grow more food, Southern farmers did the opposite because
a. they were irrational and distraught over the loss of slavery.
b. the South had a comparative advantage in cotton production.
c. the North had a comparative advantage in cotton production.
d. corn was absolutely cheaper to produce in the North.
b
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What will happen if the institutions in an economy transform from inclusive to extractive?
A) The return-to-entrepreneurship schedule will shift rightward and the opportunity cost to entrepreneurship will decrease. B) The return-to-entrepreneurship schedule will shift leftward and the opportunity cost to entrepreneurship will decrease. C) The return-to-entrepreneurship schedule will shift leftward and the opportunity cost to entrepreneurship will increase. D) The return-to-entrepreneurship schedule will shift rightward and the opportunity cost to entrepreneurship will increase.
Which of the following would be most likely to induce Congress and the president to conduct contractionary fiscal policy? A significant
A) decrease in oil prices. B) increase in labor productivity. C) increase in inflation. D) decrease in real GDP.