Assume that Canadian firms can produce one automobile or 1,000 calculators per day, and that U.S. firms can produce three automobiles or 6,000 calculators per day. The terms of trade should be between
a. 1,000 and 2,000 calculators per automobile, and the U.S. should produce both calculators and automobiles
b. 1,000 and 6,000 calculators per automobile, and the U.S. should produce automobiles
c. 1,000 and 6,000 calculators per automobile, and the U.S. should produce calculators
d. 1,000 and 2,000 calculators per automobile, and the U.S. should produce automobiles
e. 1,000 and 2,000 calculators per automobile, and Canada should produce automobiles
E
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Starting from a balanced budget, which of the following would NOT cause a deficit?
A) A decrease in taxes B) An increase in spending of goods and services C) An increase in transfer payments D) A 50 percent increase in spending accompanied by a 40 percent increase in taxes E) None of the above.
Which of the following is NOT an example of a financial derivative?
A) forwards B) bonds C) swaps D) futures E) options
The main reason that the United States has such a high standard of living is
A) low unemployment. B) high average labor productivity. C) low inflation. D) high government budget deficits.
Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?
A) The interest rate falls, investment falls even more, the AD curve shifts rightward, but total expenditures do not change. B) The interest rate falls, investment rises, total expenditures rise, and the AD curve shifts rightward. C) The interest rate falls, investment falls instead of rising, and the AD curve ends up shifting leftward. D) The interest rate falls, but investment does not respond; there is no change in total expenditures and no shift in the AD curve.