What are the results of a contractionary monetary policy in an open economy with floating exchange rates and internationally mobile capital?
a. The dollar appreciates, which leads to an increase in exports and a decrease in imports. The country therefore winds up with a deficit in capital and a surplus in its balance of trade.
b. The dollar appreciates, which attracts foreign capital. Also, imports rise and exports decline. The country therefore winds up with a surplus in capital and an increase in its trade deficit.
c. The dollar depreciates, which attracts foreign capital. Also, exports rise and imports decline. The country therefore winds up with a deficit in capital and a surplus in its balance of trade.
d. The dollar depreciates, which leads to a larger real GDP and a larger trade surplus.
b
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The nominal interest rate minus the inflation rate equals the real interest rate
Indicate whether the statement is true or false
Subtracting government investment from government purchases gives us the amount of government
A) outlays. B) primary expenditures. C) secondary spending. D) consumption expenditures.
Property rights will help ensure efficient use of a common resource like fisheries, since:
a. property rights can be used to make a good excludable. b. property rights can be used to make a good nonrival. c. property rights will eliminate any negative externality arising from the use of a resource. d. the marginal social cost will be reduced.
"Lower marginal tax rates encourage people to work, save, and invest, resulting in more output and a larger tax base." This statement most closely reflects which of the following schools of economic thought?
A. Keynesian B. Adam Smithian C. Marxist D. Supply-side economics