Refer to the information provided in Figure 27.3 below to answer the question(s) that follow.
Figure 27.3Refer to Figure 27.3. Cost-push inflation occurs if
A. the aggregate supply curve shifts from AS1 to AS2.
B. the aggregate supply curve shifts from AS1 to AS0.
C. the economy moves from Point A to Point B on aggregate supply curve AS1.
D. the economy moves from Point A to Point C on the aggregate supply curve AS1.
Answer: A
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Which of the following reasons for international specialization best explains why many small-population countries import automobiles from Japan, the U.S., and Germany rather than produce them domestically?
a. Differences in resource endowments b. Economies of scale c. Differences in tastes d. Trade restrictions
During the Great Depression, many industrial countries tried protecting domestic jobs by raising tariffs. Economic theory would suggest that the result would be
A) success for only the countries that raised tariffs first. B) success for firms that had a comparative advantage in manufactured goods rather than agricultural goods. C) reduced exports and volume of trade for everyone. D) increased incomes in the countries that pursued this policy.