As domestic income rises, net exports will tend to
a. fall, since exports remain the same but imports increase.
b. rise, since exports remain the same but imports fall.
c. fall, since exports are lower and imports remain the same.
d. rise, since exports are higher and imports remain the same.
e. may either rise or fall, since exports and imports change in opposite directions.
A
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Refer to Tax Problem. If the government imposes a $10 per unit consumption tax, then the market will produce
Consider a perfectly competitive market were demand is Q = 100 - P and Supply is Q = P - 10. a. 20 units b. 40 units c. 45 units d. 90 units
If a government wants to maximize revenues from a tax it should
A) impose it on sellers. B) impose it on consumers. C) choose a good with a relatively elastic demand. D) choose a good with a relatively inelastic demand.
Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating a 4 percent higher rate than anticipated. Which group of people is made better off by the inflation?
a. Those who lend at fixed interest rates b. Those who borrow at fixed interest rates c. Those who borrow at variable interest rates d. Those who receive fixed incomes e. Those who save at variable interest rates
Assume the following: M = $500; V = 10; and P = $10. If the money supply then increases by 50 percent while total transactions triple, the new value of the price level will be
a. $10. b. $2.50. c. $7.50. d. $5.