Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries

Which of the following is a likely consequence of a fall in private investment?

A) Mortgage defaults fall. B) Asset prices rise. C) Labor supply falls. D) Consumption falls.

Those who favor passive policy making argue that all of the following exist EXCEPT

A) perfectly flexible wages and prices. B) the trade off between inflation and unemployment is not stable in the short run and is non-existent in the long run. C) pure competition is typical. D) aggregate demand shocks can influence real GDP and unemployment.