Which one of the following statements is TRUE?
A) If the money price of a good increases, its relative price necessarily increases.
B) If the money price of a good increases, its relative price necessarily decreases.
C) The relative price of a good refers to the opportunity cost of purchasing it.
D) Rational consumers always ignore the monetary price of a good when deciding whether to buy it.
Answer: C
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According to the Heckscher-Ohlin (HO) model the source of comparative advantage is a country's
A) technology. B) advertising. C) factor endowments. D) Both A and C.
If a new government adopted some ill-advised regulations causing the economy to be less efficient ________
A) the ensuing negative supply shock would lead to an immediate rise in inflation B) in the short-run this would create a negative output gap but eventually the previous general equilibrium would be restored by subsequent rightward shifts of the AS curve C) there would be no permanent changes in output and inflation D) all of the above E) none of the above