Describe some of the gains from lowering trade barriers that may be difficult to measure
What will be an ideal response?
Cost savings from scale economies and intensified competition, product differentiation, spreading risks, gaining new knowledge, etc.
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How does a decrease in the tax rate on income earned on saving affect saving, investment, the interest rate, and economic growth?
What will be an ideal response?
If the United States has an absolute advantage in producing computer components, it should export them worldwide
a. True b. False
With positive externalities, _____
a. the market equilibrium occurs at a lesser quantity than the socially optimal output b. the market equilibrium occurs at a greater quantity than the socially optimal output c. the social benefit curve lies below the private benefit curve d. there is no deadweight loss
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. e. The GDP Price Index and reserve-related (central bank) transactions remain the same.