What have we assumed when we conclude that a real depreciation of the currency improves the current account?
A) The volume effect outweighs the value effect.
B) The value effect outweighs the volume effect.
C) All else equal and the volume effect outweighs the value effect.
D) All else equal and the value effect outweighs the volume effect.
E) All else equal and the volume effect equals the value effect.
C
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Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21. This indicates that
A) wine is a luxury good and spirits are necessities. B) wine and spirits are luxury goods. C) wine is a luxury good and spirits are inferior goods. D) wine and spirits are highly price elastic.
What will be the outcome of a government law requiring employers with more than 100 employees to incur additional employee-related costs?
a. raise the cyclical rate of unemployment b. lower the cyclical rate of unemployment c. raise the natural rate of unemployment d. lower the natural rate of unemployment
Government intervention that fails to improve economic outcomes is known as market failure.
Answer the following statement true (T) or false (F)
All else equal, increases in proprietors' income will ________.
A. increase wages B. increase exports C. increase profits and losses D. increase gross investment