Why might IS policies make a country likely to incur a large foreign debt?
What will be an ideal response?
Answer should review the nature of IS, focusing on the need to import foreign capital to produce import-substitute goods, and leading to borrowing for that purpose, whereas EO might be more apt to rely on export earnings.
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When the firm in the figure above maximizes its profit, it earns an economic profit of
A) $3,125. B) $6,250. C) $9,375. D) $5,625. E) None of the above answers are correct because the firm incurs an economic loss.
If a firm has market power it may be able
A) to protect market share. B) to continue to earn economic profits. C) minimize marginal costs. D) to maximize total revenue.
Economists face an obstacle that many other scientists do not face. What is that obstacle?
a. It is often difficult to formulate theories in economics. b. It is often impractical to perform experiments in economics. c. Economics cannot be addressed objectively; it must be addressed subjectively. d. The scientific method cannot be applied to the study of economics.
In the long run, if the Fed increases the growth rate of the money supply,
a. inflation will be higher. b. unemployment will be lower. c. real GDP will be higher. d. All of the above are correct.