Suppose a country's output is below the policy makers' desired level of output and is experiencing a trade surplus. Assume that the policy makers' goals are to achieve the desired level of output (i.e., full employment output) and balanced trade. Given this information, what type of exchange rate and/or fiscal policy can be used to achieve simultaneously these two goals? Explain
What will be an ideal response?
Y must rise and NX must fall. A depreciation would cause Y to rise but NX would rise even more. In this case, a fiscal expansion would work. Y would rise causing imports to increase and NX to fall.
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The supply curve for a good can be thought of as
A. a graphical display of “market potential.” B. a graphical representation of the data in a supply schedule. C. showing the maximum quantities that firms are able to produce. D. a forecasting tool. E. All of these responses are correct.
The excise tax on gasoline is based on the ability-to-pay principle of taxation
a. True b. False
Lora earns an income of $7,500 per month. Under the federal income tax system, the first $6,000 she earns is taxed at 10% and the remaining income is taxed at 20%. Then the average tax paid by Lora equals _____
a. 25 percent b. 12 percent c. 30 percent d. 20 percent
The price of sandwiches decreased from €3.50 to €2.10 in the Canteen. Which of the following effects would you expect?
(a) A movement along the demand curve for sandwiches resulting in a higher price and a lower quantity demanded. (b) A movement along the demand curve for sandwiches resulting in a lower price and a higher quantity demanded. (c) A shift in the demand curve for sandwiches to the left. (d) A shift in the demand curve for sandwiches to the right.