To explore the rationale for specialization, economists use the:
A. marginal principle.
B. principle of opportunity cost.
C. real-nominal principle.
D. principle of marginal exchange.
Answer: B
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When there are currency depreciations or appreciations, how is the external wealth of a nation affected?
A) It rises (along with its GDP) when there is a depreciation and falls with an appreciation. B) It usually does not change because external wealth is related to gold and capital. C) The change in wealth depends on the exchange rates with the currencies in which the assets or liabilities are denominated. D) If all assets are domestic and all liabilities are foreign, wealth always rises when there is any kind of exchange rate shift.
Transaction costs
a. can keep private parties from solving externality problems. b. are incurred in the production process due to externalities. c. increase when taxes are imposed to correct negative externalities. d. are eliminated when the government intervenes in a market with externalities.