If the United States ran large budget deficits that push the federal debt to dangerously high levels, which of the following would be most likely to occur?
a. An increase in investor confidence, an inflow of capital, and expansion in the size of the trade deficit.
b. Loss of investor confidence, a decline in the net inflow of capital, and shrinkage in the trade deficit.
c. An increase in the attractiveness of investments in the United States, an increase in the inflow of capital, and a smaller trade deficit.
d. An increase in the long-term growth rate of the U.S. economy.
B
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An undervalued domestic currency:
A) harms all the economic agents in the country. B) benefits all the economic agents in the country C) makes imports more expensive for domestic consumers. D) can be achieved by buying the domestic currency.
It is argued that high-tech industries typically generate new technologies but cannot fully appropriate the commercial benefits associated with their inventions or discoveries
If this is true then in order to maximize a country's real income, the government should A) tax the high-tech firms. B) subsidize the high-tech firms. C) protect the high-tech firms. D) outsource high-tech production. E) discourage high-tech investments.
Oil prices have risen temporarily, due to political uncertainty in the Middle East. An advisor to the Fed suggests, "Higher oil prices reduce aggregate demand. To offset this we must increase the money supply
Then the price level won't need to adjust to restore equilibrium, and we'll prevent a recession." Analyze this statement using the IS—LM model.
In the United States and other high-income countries, capital's share and labor's share of total income have been about ________, respectively
A) 1/2 and 1/2 B) 4/5 and 1/5 C) 1/3 and 2/3 D) 3/4 and 1/4