Comparative advantage is based on the
A) concept that some countries are superior to others.
B) concept of absolute advantage of producing goods in different countries.
C) concept of relative opportunity cost of producing goods in different countries.
D) concept that some countries are better endowed with natural resources.
Answer: C
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One reason why the average salary of Major League Baseball players is higher than the average salary of college professors is
A) competition among baseball club owners forces player salaries to be much higher than the players' marginal revenue products. B) the marginal revenue product of baseball players is greater than the marginal revenue product of college professors. C) the careers of most baseball players are much shorter than the careers of most college professors. D) college professors accept lower salaries in exchange for better working conditions.
How might fiscal policy be used to correct an inflationary gap?
A) The exchange rate would be adjusted to encourage imports. B) The exchange rate would be adjusted to discourage imports. C) The interest rate would be adjusted to encourage saving. D) Taxes would be increased to reduce aggregate demand.