In a large open economy like the United States, an increased government budget deficit which reduces national saving
A. reduces investment and reduces the current account balance.
B. reduces investment and improves the current account balance.
C. has no effect on investment, but reduces the current account balance.
D. has no effect on either investment or the current account balance.
Answer: A
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As the manager of a ski resort, you want to increase the number of lift tickets sold by 8 percent. Your staff economist has determined that the price elasticity of demand for lift tickets is 2. To increase sales by the desired amount, you should decrease the price of a lift ticket by:
A. 16 percent. B. 8 percent. C. 4 percent. D. 2 percent.
]If consumers become more optimistic, which of the following is the most likely in the short run?
a. A decrease in output, a decrease in money demand, and a decrease in the interest rate. b. An increase in output, an increase in money demand, and an increase in the interest rate. c. An increase in output, an increase in money demand, and a decrease in the interest rate. d. A decrease in output, an increase in money demand, and a decrease in the interest rate. e. An increase in output, a decrease in money demand, and a decrease in the interest rate.
Net domestic product
a. represents total wages and salaries in an economy b. equals GDP minus indirect business taxes c. equals GDP minus capital depreciation d. equals C + I + G + (X – M) e. is the value of existing capital stock used up in making goods
A firm with market power faces the following estimated demand and average variable cost functions:Qd = 39,000 - 500P + 0.4M - 8,000PRAVC = 30 - 0.005Q + 0.0000005Q2where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the firm's profit?
A. $335,000 B. $120,000 C. $220,000 D. $147,000