Illustrate with a graph the effects of fiscal policy when exchange rates are fixed
What will be an ideal response?
Draw horizontal BP curve. Fiscal policy shifts IS. Monetary policy must accommodate by shifting LM to match IS in order to maintain fixed exchange rate.
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As long as the supply curve for a good is upward sloping and the demand curve is downward sloping, a sales tax imposed on sellers shifts the supply curve
A) leftward and definitely raises the equilibrium price. B) leftward and possibly raises the equilibrium price. C) rightward and possibly increases the equilibrium quantity. D) rightward and definitely decreases the equilibrium quantity.
A firm is producing a joint product, Product A and Product B, with variable proportions. At its current production levels, the marginal benefit of producing Product A is $10 and the marginal cost is $8 and the marginal benefit of producing Product B is $2 and the marginal cost is $6. To maximize profits, the managers of the firm should produce ________ of Product A and ________ of Product B.
A) more; less B) less; less C) less; more D) more; m