Use the Following to Answer Questions

question 16

Multiple Choice

Use the following to answer questions:
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.In autarky,Jackson produces and consumes 30 head of cattle and 80 kilograms of wheat,while Tahoe produces and consumes 80 head of cattle and 60 kilograms of wheat.Each nation specializes completely,based on comparative advantage,and the price of 1 head of cattle equals the price of 2 kilograms of wheat.If Jackson exports 120 kilograms of wheat to Tahoe,then the new consumption point for Tahoe after trade is _____ kilograms of wheat and _____ head of cattle.

• A) 120;140
• B) 120;60
• C) 60;120
• D) 400;200

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Definitions:

Exchange Rates

The rate at which one currency can be exchanged for another.

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, per period.

Inflation

The speed at which the overall price level of goods and services increases, diminishing the buying power.