Write down your understanding and interpretation for each of the following equations, then make sure that you familiarize yourself with these formulas: KI = M – X
What will be an ideal response?
Ans: Capital inflows is related to a country’s exports and imports: is the the negative of (X – M). A country that spends more on imports than it earns from exports must borrow the difference from foreigners. That borrowing is equal to the country’s capital inflow. This implies that a country’s capital inflow is equal to the difference between imports and exports, or KI=M-X.
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Tammy installed a set of wind chimes in her backyard. She enjoys listening to the musical tones when the breeze hits them. Her neighbor Steven also enjoys the chimes, but her other neighbor Sally hates the constant noise. Tammy's wind chimes
a. create a negative externality for Steven and a positive externality for Sally b. are not related to the issue of property rights since all parties are homeowners c. are an example of an efficient market since the benefits to one party are balanced by costs to another party d. are a public good because all three parties can hear the wind chimes e. create a positive externality for Steven and a negative externality for Sally
Which of the following is not a characteristic of pure capitalism?
A. Government ownership of means of production B. Private ownership of land C. Worker freedom D. Freedom of enterprise
Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal
A. more than $15 trillion. B. more than $15 trillion but less than $15.8 trillion. C. less than $15 trillion. D. $15 trillion.
When the economy enters into a recession, your employer is ________ to reduce your wages because ________
A) unlikely; output and input prices generally fall during recession B) unlikely; lower wages reduce productivity and morale C) likely; output prices always fall during recession D) likely; aggregate demand is vertical in the long run