Explain how government deficits fell yet current account surpluses remained the same in the EU prior to adopting the euro. Also explain this in the context of the "twin deficits" theory
What will be an ideal response?
Current accounts didn't change due to a sharp fall in the private saving rate, which declined by about 4 percent of output, almost as much as the increase in government saving. The behavior of private savers neutralized the government's efforts to raise national saving. The twin deficits theory, the idea of government deficit coupled with a sharply increased current account deficit, expects the EU's current account surplus sharply as a result of the fiscal change, which didn't work in this case.
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A) the desire to reduce taxes. B) demands to reduce the retirement age. C) reduced life expectancy. D) underfunding of the system.
The demand curve facing a perfectly competitive firm is
A) the same as the market demand curve. B) downward-sloping and less flat than the market demand curve. C) downward-sloping and more flat than the market demand curve. D) perfectly horizontal. E) perfectly vertical.
After enjoying a perfectly delicious meal, Duane treats himself and orders a very expensive dessert. After one bite, Duane realizes he does not care for it at all. He chokes it down while thinking about the money he just wasted on it. Duane's decision to eat the entire dessert is an example of:
A. irrational behavior. B. a cognitive bias, because he is focused on the money spent on the dessert. C. emphasizing a sunk cost instead of weighing marginal costs and benefits. D. Duane's behavior exemplifies all of these.
If price equals 0, then consumer surplus
a. is 0 b. is maximized c. is price times quantity d. is equal to marginal utility e. cannot be determined