Consider a large open economy that has a zero current account balance. What are the effects on the world real interest rate, national saving, investment, and the current account balance in equilibrium if(a)future income rises?(b)business taxes decline?(c)government purchases decline?(d)the future marginal product of capital declines?
What will be an ideal response?
| (a) | rw rises, S falls, I falls, CA falls. |
| (b) | rw rises, S rises, I rises, CA falls. |
| (c) | rw falls, S rises, I rises, CA rises. |
| (d) | rw falls, S falls, I falls, CA rises. |
Economics
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If a substitute good is easy to find, then demand for a good is
A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic. E) Substitutes don't have any effect on elasticity.
Economics
Which of the following best describes a good with perfectly elastic demand?
A) For a given price change, the percentage change in quantity demanded will be less than the percentage change in its price. B) The demand curve for the good initially slopes upward, reaches its maximum, and then slopes downward. C) Even the smallest increase in the price of the good will cause consumers to stop consuming it completely. D) The quantity demanded of the good is completely unaffected by a price change.
Economics