Why do countries who are members of a currency union have difficulty in recovering from a recession?
What will be an ideal response?
Countries having a flexible exchange rate regime see their currencies depreciate during recessions and thus are able to increase net exports, stimulating the economy. This is not possible when a country is a member of a currency union unless the common currency is devalued. Therefore, these countries have difficulty recovering from recessions.
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The above table gives the demand and supply schedules for cat food. If the price is $3.00 per pound of cat food, will there be a shortage, a surplus, or is this price the equilibrium price?
If there is a shortage, how much is the shortage? If there is a surplus, how much is the surplus? If $3.00 is the equilibrium price, what is the equilibrium quantity?
Why do economists believe that it is socially optimal to have some amount of pollution?
What will be an ideal response?
Assume the demand curve is line AD. If price is CB, then in the graph above, consumer surplus is bounded by
A. CAD.
B. CBED.
C. BAE.
D. None of these choices are true.
As an economy ______________, it can increase production and _____________.
A. uses its comparative advantage; real GDP per person B. uses its comparative advantage; monetary exchange C. moves away from specialisation; real GDP per person D. enacts a democracy; require less investment per person