Suppose the economy is initially operating at full employment. A fiscal policy action that results in an increase in the size of the budget deficit will cause which of the following in the long run?

Refer to Scenario 10.9. What is the maximum amount that Maui Macadamia would be willing to spend in order to maintain its monopoly through rent seeking?

A) 0 B) 1,800 C) 5,400 D) 10,800

The limits of the terms of trade are determined by the:

a. distribution costs in each country. b. stock of foreign exchange in each country. c. average total costs of producing the commodities in each country. d. opportunity costs in each country. e. currency exchange rate between the trading partners.