Which of the following is an example of a normative economic statement?
A) Lower income tax rates will generate greater income tax revenue to the government.
B) Income tax rates should be lower because that will increase government revenue.
C) Lower income tax rates yield a larger federal government deficit.
D) The federal budget deficit has increased every year for the last twenty years.
Answer: B
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If the exchange rate between the U.S. dollar and the Indian rupee (rupees per dollar) is greater than the relative purchasing power between the two countries, which of the following would be true?
A) There are opportunities for profit by purchasing goods in India and then selling them in the United States. B) Purchasing power parity predicts that the value of the dollar will rise as traders take advantage of arbitrage opportunities. C) There are no arbitrage opportunities for which traders can take advantage. D) Purchasing power parity predicts that the dollar is undervalued as traders take advantage of arbitrage opportunities.
When a single person (or small group) has the ability to influence market prices, there is
a. competition. b. market power. c. an externality. d. a lack of property rights.
Assuming an economy is initially at potential output, in the long run, an expansionary monetary policy is expected:
A. not to affect output in either the short run or the long run. B. to affect output in both the short run and the long run. C. not to affect output in the long run. D. to affect output, but only in the long run.
Refer to the information provided in Table 24.5 below to answer the question(s) that follow.Table 24.5All Numbers are in $ Million
Refer to Table 24.5. Assuming constant MPC, at income of $1,200 million, saving is $________ million, at income of $1,600 million, saving is $________ million.
A. 160; 240 B. 170; 250 C. 150; 230 D. 180; 260