Refer to Table 5.1. Does either Andrea or Hector have an absolute advantage and if so, in what product?
A) Andrea only has an absolute advantage in producing bracelets.
B) Hector only has an absolute advantage in producing bracelets.
C) Andrea has an absolute advantage in producing both products.
D) Hector only has an absolute advantage in producing tiaras.
Question 2
The above table has the private demand for loanable funds and the private supply of loanable funds schedules.
If the government budget surplus is 200 billion, and there is no Ricardo-Barro effect, the equilibrium real interest rate is ________ and the equilibrium quantity of loanable funds is ________.
A) 8 percent; 700 billion
B) 4 percent; 700 billion
C) 4 percent; 500 billion
D) 8 percent, 500 billion
E) 6 percent; 600 billion
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