The returns from the home country and foreign country capital markets are equalized if:
a. the home country interest rates are higher.
b. the foreign country interest rates are higher.
c. the foreign country has a higher price level.
d. both countries have no capital controls.
Ans: d. both countries have no capital controls.
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If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, the mpc equals 0.9, and potential output (Y*) equals 9,000, then taxes must be increased by approximately ________ to eliminate any output gap.
A. 90 B. 111 C. 100 D. 1,000
With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45 degree line at $8 trillion. This result indicates that
a) autonomous consumption spending is $8 trillion b) consumption spending is $8 trillion when disposable income is $8 trillion c) consumption spending is less than $8 trillion because taxes must be paid d) consumption spending is more than $8 trillion because taxes have been paid
The United States generally has a comparative advantage in the development of technology because it has:
A. patent laws, which no other country has. B. large amounts of natural resources. C. a disproportionate share of the world's best research universities. D. the greatest need for new technology.
Consider a society facing the production possibilities curves in the figure shown. What is the most likely cause of a society moving from PPF1 to PPF3?
A. Better printing press technology B. A desire to read more books C. More workers D. Better sewing technology