During a recession, would classical economists propose that changes in government spending or taxes be used to improve economic conditions? Briefly explain
What will be an ideal response?
No. Classical economists do not endorse changes in government spending or taxes designed to offset business cycle fluctuations; the classical model shows that such policy attempts are not likely to improve macroeconomic conditions. From a classical viewpoint, government spending and tax decisions should be long-run decisions based on cost—benefit analysis.
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Less of an economy's resources will be channeled into building new factories and equipment when: a. interest rates are high
b. households decide to save more of their income. c. firms are optimistic about their future profits. d. aggregate income increases. e. an economy has a trade deficit.
When Canada buys lemons from Mexico instead of growing lemons in heated greenhouses:
A. Canadian consumers will gain because lemon prices will drop. B. Canadian lemon producers will gain because lemon prices will drop. C. Canadian consumers will gain because lemon prices will rise. D. Mexican lemon producers will lose because lemon prices in Canada will rise.
Why does an efficient distribution of outputs among households occur in perfectly competitive markets?
What will be an ideal response?
The General Agreement on Tariffs and Trade (GATT) was initiated in response to
a. in increase in exports of low-priced goods from developing countries to developed countries. b. the replacement of manufacturing jobs with service jobs in developed countries. c. economic dislocations caused by the North American Free Trade Agreement (NAFTA) in the 1990s. d. high tariffs imposed during the Great Depression of the 1930s.