If the opportunity cost of producing cheese is higher in Greece than it is in Italy, then:
a. Greece should specialize in producing cheese.
b. Italy should specialize in producing cheese.
c. both Greece and Italy should produce cheese.
d. Greece gives up fewer goods to produce cheese than Italy does.
e. Italy has a better economy than Greece.
Question 2
The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to classical economists, is for the government to:
a. increase the minimum wage.
b. impose wage and price controls.
c. stimulate aggregate demand.
d. cut taxes.
e. do nothing.
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