Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, the net gain of total economic surplus equals area(s)
A. A + B + C + D.
B. B + C.
C. B + C + D.
D. D.
Answer: D
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Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index rises, and current international transactions become more negative (or less positive). b. There is not enough information to determine what happens to these two macroeconomic variables. c. The GDP Price Index rises, and current international transactions become more positive (or less negative). d. The GDP Price Index and current international transactions remain the same. e. The GDP Price Index falls, and current international transactions become more negative (or less positive).
Which of the following factors is not part of the current account (CA) of a country?
a) exports and imports b) income payments and receipts c) unilateral transfers d) purchase of foreign stocks
Assume the government was to levy a tax of $100 per person on every individual in the country. Would this tax be characterized as proportional, progressive or regressive? Make sure to explain your reasoning
What will be an ideal response?
Managers of profit centers are usually given a lot of discretion because
a. They always do an excellent job b. The company can never judge their performance c. The company has a clear performance evaluation metric d. They rarely ever do a good job