Quiz3 - Name _ Last 4 _ Date _ True False Questions answer...

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Name ____________________________ Last 4 ________ Date ___________ True – False Questions – answer A for true and B for false Form A 1. Sarah can paint a house in 5 hours and put in windows in 4 hours. Bob can paint a house in 3 hours and put in windows in 1 hour. Bob has a comparative advantage in painting houses. 2. The less flexible the labor market, the more likely gains from trade will materialize since inflexible labors markets are consistent with specialization. 3. Free trade is consistent with Jurassic Park economics. 4. A person who can produce the same amount of a good with the lowest opportunity cost is said to have a comparative advantage in the production of that particular good. . 5. According to the Samuelson model, the US can maintain the current gains from trade if we can prevent the innovation gap from closing. 6. According to the Samuelson model, if the innovation gap closes then US welfare may fall to the point where we would be better off, in terms of welfare, if we closed the economy and therefore, conducted no trading of goods and services with the rest of the world. 7. We argued that (dollar for dollar) the wealth effect on consumption is stronger for changes in stock market wealth, relative to real estate wealth, since people usually cash in the stock market wealth and start spending it quickly. 8. In order to lower the federal funds rate the Federal Reserve would need to conduct open market purchases. 9. The FOMC meets every week unless economic conditions warrant more frequent meetings. 10. The president of the New York Federal Reserve Bank votes at all FOMC meetings. 11. Currently the discount rate is set one full percentage point above the target for the federal funds rate. 12. The “Services” component of consumption is the largest element of consumption expenditures accounting for over 50% of total consumption. 13. An example of a non-durable good would be a pizza. 14. One way monetary policy is supposed to work is through the net export sector. For example, raising interest rates will tend to strengthen the value of the US dollar and thus, we will tend to buy more foreign goods at the expense of domestic consumption. 15.
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This note was uploaded on 03/29/2008 for the course ECON 004 taught by Professor Graf,pauledwin during the Spring '07 term at Pennsylvania State University, University Park.

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Quiz3 - Name _ Last 4 _ Date _ True False Questions answer...

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