Who has the absolute advantage in the production of rubber or radios?

Posted: July 1st, 2022

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Complete the following problems:
Chapter 14 Problem 31
31. Humongous Bank is the only bank in the economy.
The people in this economy have $20 million in money,
and they deposit all their money in Humongous Bank.
a. Humongous Bank decides on a policy of holding
100% reserves. Draw a T-account for the bank.
b. Humongous Bank is required to hold 5% of its
existing $20 million as reserves, and to loan out
the rest. Draw a T-account for the bank after it
has made its first round of loans.
c. Assume that Humongous bank is part of a
multibank system. How much will money supply
increase with that original $19 million loan?
Chapter 15 Problem 40
40. All other things being equal, by how much will
nominal GDP expand if the central bank increases the
money supply by $100 billion, and the velocity of
money is 3? (Use this information as necessary to
answer the following 4 questions.)
Chapter 16 Problem 32
32. A British pound cost $2.00 in U.S. dollars in 2008,
but $1.27 in U.S. dollars in 2017. Was the pound weaker
or stronger against the dollar? Did the dollar appreciate
or depreciate versus the pound?
Chapter 20 Problem 30
30. In Japan, one worker can make 5 tons of rubber or
80 radios. In Malaysia, one worker can make 10 tons of
rubber or 40 radios.
a. Who has the absolute advantage in the
production of rubber or radios? How can you
tell?
b. Calculate the opportunity cost of producing 80
additional radios in Japan and in Malaysia. (Your
calculation may involve fractions, which is fine.)
Which country has a comparative advantage in
the production of radios?
c. Calculate the opportunity cost of producing 10
additional tons of rubber in Japan and in
Malaysia. Which country has a comparative
advantage in producing rubber?
d. In this example, does each country have an
absolute advantage and a comparative advantage
in the same good?
e. In what product should Japan specialize? In what
product should Malaysia specialize?
You should save your file as Assignment 4_ Your Name.

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