According to the supply and demand framework in the text, an increase in import trade tends to ______ domestic production of a good.
Fill in the blank(s) with the appropriate word(s).
Ans: decrease
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Which of the following is not a component of the aggregate expenditures of a country?
a. Investment b. Government spending c. Net exports d. Consumption e. Transfer payments
In the spring of 2002, Argentina was forced to devalue its peso and disband its currency board that was responsible for the fixed exchange rate between the peso and the U.S. dollar. Explain the origin of this crisis and the painful remedies that Argentina has had to endure
Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and slow long term growth because
a. more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt. b. government spending is directed by political forces, rather than efficient cost-revenue comparisons. c. more political spending will lead to more wasteful rent-seeking activities and less production of goods and services that people value. d. All of the above are true.
If an increase in income results in a rightward parallel shift of the demand curve, then at any given price, the price elasticity of demand will have
A) increased in absolute terms. B) decreased in absolute terms. C) remained unchanged. D) increased, decreased or stayed the same. It cannot be determined.