Net exports will be negative if:
A. exports exceed imports.
B. it is an open economy.
C. imports exceed exports.
D. it is a closed economy.
Answer: C
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According to the Application, the argument that the broken window is good for society
A) works in the Keynesian world when the economy is operating below full employment. B) never works in the Keynesian or classical worlds regardless of where the economy is operating relative to full employment. C) works in the classical world when the economy is operating at full employment. D) works in both the Keynesian and classical worlds regardless of where the economy is operating relative to full employment.
It is possible for an economy to keep its currency overvalued against the dollar if:
A) it sells the domestic currency in the foreign exchange market. B) it has substantial domestic currency reserves. C) it buys the dollar in the foreign exchange market. D) it has substantial dollar reserves.
Suppose the government decides that milk producers are not earning a high enough price for their milk to maintain an adequate standard of living and that the solution to the problem is to guarantee the milk producers a minimum price. We would expect that
A) consumers will have to pay a higher price per gallon of milk and will not be able to consume as much as they did before. B) the government will have to purchase the surplus milk on the market and then find a means of storing this milk. C) the dairy farmers will enjoy a higher standard of living at the expense of taxpayers and consumers. D) all of the above
An example of a public good that is difficult to make excludable is:
A. state universities. B. city buses. C. police protection. D. toll roads.