In the 1980s, the U.S. government budget deficit rose. At the same time the U.S. trade deficit grew larger, the real exchange rate of the dollar appreciated, and U.S. net capital outflow decreased. Which of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?
a. the U.S. trade deficit grew
b. the real exchange rate of the dollar appreciated
c. U.S. net capital outflow fell
d. None of the above is contrary to the predictions of the model.
d
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We can expect deviations from PPP because of
A) quotas and tariffs. B) transportation costs. C) differentiated goods. D) All of the above.
A main rationale for government intervention in markets ________ and ________
A) is to reduce producer surplus; redistribute wealth B) concerns the creation of public goods; reduces free-riding C) is to correct market failures; increase surplus D) There is never an economic rationale for government intervention.
The crowding-out effect refers to:
a. higher interest rates and reduced private spending that results from financing federal budget deficits. b. higher future taxes accompanying budget deficits to reduce private consumption. c. the inflation rate to rise when the unemployment rate is low. d. increases in private savings to reduce interest rates and, thereby, crowd-out government
Exhibit 7-1 Quantity and total revenue data for a firm Quantity Total Revenue 0 $ 0 1 62 2 124 3 186 Exhibit 7-1 indicates that this firm is operating in which type of market structure?
A. The market structure cannot be determined from the information given. B. monopoly C. perfect competition D. monopolistic competition