What did the Economic Act of 1946 require the U.S. government to do?
(a) Keep its "hands off" the economy
(b) Present an annual "Economic Report of the President"
(c) Let market forces determine equilibrium quantities of labor hired and wages paid
(d) Maintain a current account surplus where U.S. exports exceeded imports each year
(b)
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Assume that the government has a target value, X, for the current account surplus
(a) What is the goal of external balance? (b) Assume that we are dealing with only the short run, what are the values of P and P?? (c) Given fixed P and P , what would happen if E rises? (d) Given P and P , what would happen if T decreases, i.e., an expansionary fiscal policy? (e) Given P and P , what would happen if G increases, i.e., an expansionary fiscal policy? (f) Given all of the above, what is the relation between the exchange rate, E, and fiscal ease, i.e., an increase in G or a reduction in T? (g) Assume that the economy is in external balance. What will happen if the government maintains its current account at X, but devaluates the domestic currency? (h) Assume that the economy is at external balance. What will happen if the government raises E? (i) Assume that the economy is at external balance. What will happen if the government lowers E?
The market mechanism may best be defined as
A. Price regulation by government. B. The use of market prices and sales to signal desired output. C. The use of market signals and government directives to select economic outcomes. D. The process by which the production possibilities curve shifts inward.
How is tax incidence important in tax policy in developing countries?
What will be an ideal response?
Two cities A&B are deciding upon joint pollution laws. Right now they both face identical prices for their housing. If they decide that city A is to be a pollution free city "Clean town" and all the factories would locate in city B "Smogville", in the long run, we expect to see
a. Asthmatics moving to Smogville b. Poorer families moving to Cleantown c. Residents in both the cities relocating based on their tolerance for pollution d. Residents in both the cities being worse off