What effect do protectionist policies have on the trade deficit?
Protectionist policies increase the demand for U.S. dollars, and so lead to an appreciation of the real exchange rate for U.S. dollars. However, the policies have no impact on either the supply of loanable funds or the demand for loanable funds, and so they have no effect on net capital outflow. Since net capital outflow must equal net exports, there is also no change in net exports. The appreciation of the dollar therefore leads to falling net exports which offsets the rise in net exports that protectionist policies would otherwise create. The decrease that imports would create if the exchange was unchanged, is offset by an increase in imports and a decrease in exports when the dollar appreciates. So, overall both imports and exports fall.
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When the average price level of a country actually falls, this is known as _____
a. inflation b. deflation c. hyperinflation d. cost-push inflation
These are the cost and revenue curves associated with a firm.
Assuming the firm in the graph shown is producing Q1 and charging P3, it is likely showing the cost and revenue curves of a monopolistically competitive firm that is:
A. earning zero economic profits. B. earning positive economic profits. C. It is impossible to tell from the graph provided. D. earning negative economic profits.
The dispute over the pay of chief executive officers (CEOs) of U.S. corporations hinges on whether or not such pay:
A. should be granted for past performance or for current performance. B. is determined in a competitive labor market or in a monopsonistic labor market. C. is justified on productivity grounds or mainly reflects an overestimation of CEO importance by corporate boards of directors. D. should contain performance incentives such as stock options, stock shares, or bonuses.
Which of the following transactions is included in gross output (GO)?
A. the sales of corporate bonds to an investor B. the estimated costs of human health effects due to air pollution C. the sales of an accounting software package to an accounting firm D. sales of used goods