A tax reduction shifts the consumption schedule downward.
Answer the following statement true (T) or false (F)
False
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
The people of Andres, a small fishing village in a country, are facing extremely difficult times as their source of livelihood is threatened. Unregulated by the government, the coastline was subject to overfishing for a long time, adversely affecting the stock of fish. The variety of fish has declined and it takes much longer to haul in a decent catch these days. People in Andres are worried that
they may have to migrate to other areas or look for alternative sources to earn a living. Which of the following is most similar to this scenario? a. Oil producers hoard the extracted oil to increase prices. b. Public highways get congested because they are nonexclusive. c. Poaching of the Javan rhino for its priced horns in unprotected forest belts of Indonesia has led to its near extinction. d. People in Jinbong village now have to pay to be able to fish in the local pond. e. A farmer shifts from potato to corn cultivation because the latter offers more profits.
Assume a U.S. investor buys a Mexican bond with a face value of MXP 1,000 and a 20 percent annual interest yield while the exchange rate is MXP 10 per dollar. What is the dollar return from the bond if the exchange rate at the end of the year is MXP 11 per dollar?
a. 9.1% b. 10.0% c. 18.2% d. 20.0% e. 32.0%
In a business cycle, a peak represents the end of ________ and a trough represents the end of ________.
A. a recession; an expansion B. a trough; a peak C. an expansion; a recession D. a depression; an expansion