This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were open to free trade, domestic consumers would consume how many units?
A. 115
B. 90
C. 60
D. 150
Answer: D
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When people decorate the exteriors of their homes with colored lights, they create ________ for the motorists who pass by
A) an external benefit B) a competitive good C) a public good D) an excludable good
Fiscal policy refers to
A) changes in the amount of government expenditures and taxes to achieve particular economic objectives. B) changes in the composition of a given amount of government expenditures to achieve particular economic objectives. C) changes in interest rates initiated by government action. D) any change in government spending or taxes that has the intended effect of destabilizing the economy.
If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, then the real exchange rate is defined as
a. e(P/P). b. e(P/P). c. e + P/P. d. e - P/P.
Suppose an economy has a balanced federal budget, and a favorable supply shock hits the economy. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________.
A. fall; increase; deficit B. increase; increase; surplus C. fall; fall; deficit D. increase; fall; surplus