Assume that an increase in Costa Rica's government budget deficit reduced desired national saving by 10 million colon. Assuming Costa Rica is a small open economy, you would expect the government's action to
A. reduce the current account balance by more than 10 million colon.
B. reduce the current account balance by exactly 10 million colon.
C. increase the current account balance by less than 10 million colon.
D. increase the current account balance by exactly 10 million colon.
Answer: B
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Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to
A) $11.25 million. B) $18 million. C) $32.5 million. D) $45 million.
Refer to Figure 26-9. In the figure above suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) an increase in the required reserve ratio B) an open market sale of Treasury bills C) an open market purchase of Treasury bills D) a decrease in income taxes
Which of the following correctly describes a way in which deficit spending can impose a burden on future generations? I
Failure to allocate deficit spending to uses that boost future real Gross Domestic Product (GDP) will require taxing future generations at a higher rate to repay the resulting higher public debt. II. Government deficits that lead to higher employment and real Gross Domestic Product (GDP) in the future will generate increased income taxes for future governments, which will respond by spending the higher tax revenues, creating higher future government budget deficits. III. Other things being equal, deficit spending fuels increased consumption of goods and services by the current generation that crowds out capital investment, thereby leaving future generations with a smaller stock of capital than otherwise would have existed. A) I only B) II only C) I and III only D) II and III only
If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen, then a __________ exists
A) shortage of dollars B) surplus of dollars C) surplus of yen D) shortage of yen E) b and d