Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing
A. both cheese and cars.
B. cheese.
C. neither cheese nor cars.
D. cars.
Answer: D
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Most monetarists ________ advocate expanding the money supply during bad times and ________ advocate slowing the growth of the money supply during good times.
A. do not; do not B. do not; do C. do; do not D. do; do
A reduction in the marginal propensity to save from .4 to .3 will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a smaller effect on output. B) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a larger effect on output. C) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a smaller effect on output. D) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a larger effect on output.