What are the problems with government actions in DVC?
What will be an ideal response?
The major problem with government leadership in DVC is that it is often undermined by corruption and inefficiencies. For example, the use of tax policy to encourage saving and channel funds to public investments cannot work if the tax funds are allocated based on political or family influence, or if the public projects funded are not sound long-term investments. Government bureaucracy can hinder economic growth if political power directs economic activity to inefficient projects.
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Assume that for good X the supply curve for a good is a typical, upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. If the good is taxed, and the tax is doubled, the
a. base of the triangle that represents the deadweight loss doubles. b. height of the triangle that represents the deadweight loss doubles. c. deadweight loss of the tax quadruples. d. All of the above are correct.
Holding all else constant, an increase in the real interest rate on Mexican assets will ________ the supply for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. decrease; decrease B. decrease; increase C. increase; increase D. increase; decrease
The slope of a budget constraint represents:
A) the price of the good measured along the horizontal axis. B) the price of the good measured along the vertical axis. C) the opportunity cost of one good in terms of another. D) the money income of the consumer.
A unit-elastic demand curve never touches or crosses either of the axes. Why?
What will be an ideal response?