In the last few decades, the United States has generally experienced trade deficits.
a. true
b. false
Answer: a. true
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
An overvalued exchange rate is an exchange rate:
A. at which the quantities of currencies demanded and supplied in the foreign exchange market are equal. B. that equals the number of units of a foreign currency over the number of units of domestic currency. C. that has an officially fixed value less than its fundamental value. D. that has an officially fixed value greater than its fundamental value.
Refer to Table 4-1. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of the champagne falls from $24 to $14
A) Larry and Moe will receive more consumer surplus than Curly. B) Curly will buy four bottles; Moe will buy two bottles, and Larry will buy one bottle. C) consumer surplus increases from $32 to $53. D) consumer surplus will increase from $80 to $95.
Which of the following statements is true?
A. Under floating exchange rates, external capital-flow shocks can have effects on internal balance by altering the exchange rate and the country's international price competitiveness. B. Monetary policy is a powerful economic tool for a country with fixed exchange rates and high capital mobility. C. An expansionary monetary policy tends to increase the exchange rate value of the domestic currency in the short run. D. Fiscal policy for a country with floating exchange rates is more powerful with a high degree of capital mobility than with a low degree of capital mobility.