If there is an increase in taxes on business firms in a small open economy, it causes the current account to ________ and the equilibrium quantity of saving to ________.
A. rise; remain unchanged
B. rise; fall
C. fall; fall
D. fall; remain unchanged
Answer: A
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A) A decrease in autonomous expenditure B) An increase in autonomous expenditure C) An increase in induced expenditure D) Equality between aggregate expenditure and real GDP E) An increase in the expenditure multiplier
High budget deficits may:
a. encourage overly expansionary fiscal policy. b. create higher inflation. c. increase the risk of sovereign debt default. d. all of the above.
If the demand curve for a good is unit price elastic and the supply curve is perfectly price elastic, a $1 specific tax imposed on the sellers of this good will
A) shift the supply curve up vertically by $1. B) shift the demand curve down vertically by $1. C) not raise price at all. D) cause price to increase but by less than $1.
If the Herfindahl-Hirschman Index of an industry is less than 1,000, then the Antitrust Division of the Justice Department
A. considers the industry unconcentrated. B. will challenge any merger that would increase the index by over 100 points. C. considers the industry already concentrated. D. will challenge any merger that raises the index by more than 50 points.