Suppose the Brazilian currency, the real, depreciates significantly. The AS/AD model predicts that this would cause a trade:
A. surplus for Brazil and shifted its AD curve left.
B. surplus for Brazil and shifted its AD curve right.
C. deficit for Brazil and shifted its AD curve left.
D. deficit for Brazil and shifted its AD curve right.
Answer: B
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A federal budget deficit ________ interest rates, which ________ exchange rates (foreign currency per domestic currency), and ________ the balance of trade
A) reduces; raises; reduces B) raises; reduces; reduces C) reduces; reduces; raises D) raises; raises; reduces
A nation practicing mercantilism aims to
a. keep the government out of the economy. b. establish an excess of exports over imports. c. balance imports with exports. d. replace gold and silver with paper money. e. reduce the size of the military sector.
The most successful free trade agreements achieve all of the following goals, except:
a. benefiting exporters by increasing exports to member countries. b. increasing the volume of trade without changing the pattern of trade. c. benefiting consumers by making a wider variety of goods available at a lower price. d. stimulating trade creation to allow the benefits of trade to be realized. e. protecting domestic industries from foreign competition.
Which of the following is the best choice to eliminate a recessionary gap if the desired fiscal stimulus is $10 billion and the aggregate demand shortfall is $100 billion, while the MPC is 0.90?
A. Tax cut of $10 billion. B. Tax hike of $10 billion. C. Tax hike of $11.11 billion. D. Tax cut of $11.11 billion.