Refer to the Information Provided in Table 33

question 22

Multiple Choice

Refer to the information provided in Table 33.1 below to answer the question(s) that follow.
Table 33.1
-Refer to Table 33.1. Before specialization, Mexico produces 160 bushels of oranges and 40 bushels of bananas, and Guatemala produces 30 bushels of oranges and 40 bushels of bananas. After specialization, the increase in banana production is

• A) 10 bushels of bananas.
• B) 15 bushels of bananas.
• C) 20 bushels of bananas.
• D) 40 bushels of bananas.

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Definitions:

Money Supply

At a specific instant, the total monetary assets within an economy, including coins, cash, and the amounts present in checking and savings accounts.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of interest payments.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the true yield on savings.

Monetary Neutrality

The idea that changes in the money supply only affect nominal variables (like prices) in the long run and have no effect on real variables (like output or employment).