How might a budget deficit affect the balance of trade?
A) A budget deficit reduces interest rates, which reduces exchange rates and reduces the balance of trade.
B) A budget deficit raises interest rates, which raises exchange rates and reduces the balance of trade.
C) A budget deficit raises interest rates, which raises exchange rates and increases the balance of trade.
D) A budget deficit reduces interest rates, which raises exchange rates and reduces the balance of trade.
B
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Which of the following is NOT correct about a single-price monopoly?
A) Maximum profit is found where demand is the most inelastic. B) Marginal revenue is negative when demand is inelastic. C) Marginal revenue is positive when demand is elastic. D) To sell more output, the firm must lower its price. E) To maximize its profit, the firm produces so that marginal revenue equals marginal cost.
All of the following statements regarding the marginal revenue product (MRP) curve and the demand for labor are true EXCEPT
A) an individual firm's demand for labor is its MRP curve. B) under conditions of perfect competition, MRP equals marginal physical product multiplied by the product's price. C) an increase in the market demand for a given product decreases the product's price. D) the demand for labor is a derived demand.
A tax rate cut, increase in government purchases, and creating an investment tax credit would shift: a. only the aggregate demand curve
b. only the aggregate supply curve. c. both the aggregate supply and aggregate demand curves. d. neither the aggregate supply nor the aggregate demand curve.
The spot exchange rate is equal to the forward exchange rate:
a. Only when the exchange rate is equal to 1.00 because then the inverse is also 1.00. b. When the central bank chooses to equalize both rates. c. When the interest rates of the two countries are not expected to change. d. When the difference between the interest rates of the two countries are expected to remain constant. e. When the nominal interest rates of the two countries are equal.