Jane's utility function is represented as: U = F0.5 C0.5, F is quantity of food and C is quantity of clothing. If her budget constraint is represented as: 120 = 2F + C, her optimal bundle of consumption should be

When the exchange rate, E, and the foreign price level, P*, is fixed, domestic inflation depends primarily on

A) amount of aggregate demand. B) home price level set by IMF. C) current account balance. D) government tax policy. E) foreign interest rates.

“People who make more money should pay higher taxes” is an example of

A. the benefits principle. B. horizontal equity. C. vertical efficiency. D. the ability-to-pay principle.