For a country to successfully maintain a fixed exchange rate value of its currency relative to another currency (for example, as is done when currencies are unified or pegged), it must
a. maintain a relatively high rate of inflation.
b. balance the government budget each year.
c. give up the independence of its monetary policy.
d. run a trade deficit.
C
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To set a tax rate at the appropriate level to maximize its tax revenues, a government must engage in
A) static tax analysis. B) dynamic tax analysis. C) debt-free tax analysis. D) ad valorem tax analysis.
You estimate that the income elasticity of demand for dairy products in the use is 0.20. If national income is predicted to decrease by 3%, what is the percentage change in dairy products expected (all else equal)?
a. +3% b. -3% c. + 0.6% d. - 0.6% e. Can't tell from the available information
When a profit maximizing firm produces, they will be producing at that output at which marginal cost = marginal revenue
A. all of the time. B. some of the time. C. on rare occasions. D. none of the time.
An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock. B. negative supply side shock. C. positive demand side shock. D. positive supply side shock.