According to UIP, when domestic and foreign interest rates are equal, the exchange rare of the home currency is expected to
a) fall
b) remain contact
c) rise
d) not enough information is provided
Ans: b) remain contact
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Special interests influence tax policy at all levels of government, but ______
a. they are most effective at the local level b. they are most effective at the state level c. they are most effective at the federal level d. they are equally effective at all levels of government
A Californian student consumes Internet services (I) and books (B)
Her preferences are represented by a Cobb-Douglas utility function of the type: U(I,B) = I.5B.5. Initially Y = 100, PI = PB = 1. Lately, however, because of the electricity shortage, the price of the Internet services has increased to 2. The government has decided to give a transfer to the student so that she can recover her initial welfare. In order to determine the transfer the government has hired three consultants who have made the following suggestions: Consultant A: The transfer should allow the student to buy her initial bundle. Consultant B: The transfer should allow the student to get her initial level of utility. Consultant C: The government should give her a transfer of 20. a. Using the expenditure function, find the amount of the transfer implied by consultant A. b. Find the amount of the transfer implied by consultant B. c. Determine whether the consumer is better or worse off from Consultant C's suggestion than before the price increases.
Assume that the current price of a market basket of goods is $2,500 and the base year price of the same market basket is $1,340. The price index is
A) 53.6. B) 40.0. C) 138.3. D) 186.6.
The Laffer curve expresses a relationship between:
a. tax rates and tax revenues. b. inflation and unemployment. c. interest rates and saving. d. money supply and the price level.