Describe the policies a nation would follow to correct a current account deficit. What are the primary purposes of each type of policy?
What will be an ideal response?
Policy makers need to turn domestic expenditures away from foreign-produced products toward domestic products (expenditure switching) and reduce the overall level of demand in the economy (expenditure reducing). Expenditure reducing policies are intended to avoid inflation. Expenditure switching policies are intended to avoid recession.
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Craig was willing to sell his car for $20,000 . If he receives a producer surplus of $500, then the selling price of the car is _____
a. $21,500 b. $10,000 c. $20,500 d. $19,500
The present discounted value of a future payment will decrease when interest rates decrease.
Answer the following statement true (T) or false (F)
If equilibrium GDP is $300 billion greater than full employment GDP and there is an inflationary gap of $50 billion, how much is the multiplier?
What will be an ideal response?
Other things constant, if the interest rate rises, people prefer to hold: a. less money because the opportunity cost of holding money has increased
b. more money because the opportunity cost of holding money has increased. c. less money because the opportunity cost of holding money has declined. d. more money because the opportunity cost of holding money has declined. e. the same amount of money because the opportunity cost of holding money is zero.