Following the economic crisis in 1994–1995, the Mexican peso fell sharply in value. What will be the main economic effects in Mexico of such an exchange rate change?
A. It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well.
B. It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well.
C. It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well.
D. It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well.
Answer: C
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In a market economy, which of the following is most important if a worker is going to achieve high earnings?
a. hard work b. provision of goods and/or services that others value highly c. having a graduate degree in a field like history or sociology d. membership in a labor union
How does the tax code contribute to rising health care costs?
A. Since the tax code provides exemptions for research and development, it provides an incentive for businesses to develop high-tech and expensive new treatments. B. Since services are not subject to state sales taxes, households tend to spend more of their money on health care services than on other goods. C. Since health care purchases are subject to such high taxes, total spending on health care (including taxes) is quite high. D. Since health insurance benefits are untaxed, workers have an incentive to receive more of their compensation in the form of health insurance benefits.