In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year
Following these two changes, the equilibrium quantity of books A) decreases.
B) increases.
C) remains unchanged.
D) either increases or decreases. We cannot say which.
A
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When exchange rates are very volatile, with a wide range of variation, the currency is said to be:
a. in limbo. b. in free float. c. perfectly flexible. d. in sluggish float.
Use the following table to illustrate the importance of macroeconomic policy coordination
Show that the two governments would have been happier if the two of them had adopted looser monetary policies, but given the policies that the other government did adopt, it is not in the interest of any individual government to change its course. Assume that each country wishes to get the biggest reduction in inflation rate at the lowest cost in terms of unemployment. This means that each country maximizes-??/?U, the inflation reduction per point of increased unemployment.