Based on Scenario 1 above critically evaluate the following statement. "Because of the productivity differential between the two men we can conclude that the young man has a comparative advantage in the production of everything over the older man
What will be an ideal response?
This statement is not true. Comparative advantage is achieved by being able to produce a good or service at a lower opportunity cost than someone else can. Here the only information that we have is that the young man is more productive than the older man. This isn't sufficient information to conclude that he has a comparative advantage in the production of everything.
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In developing nations, the combined rate of urban and rural unemployment or underemployment is about
a. 1 percent b. 10 percent c. 20 percent d. 30 percent e. 80 percent
According to monetarists, which of the following would be most important for the control of inflation?
a. a steady increase in federal expenditures b. the imposition of price controls c. keeping the growth rate of the money supply low and steady d. a steady increase in the size of the budget deficit