Which type(s) of economies interact with other economies?
a. only closed economies
b. only open economies
c. closed economies and open economies
d. neither closed nor open economies
b
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Monetizing the budget deficit
A) creates a full-employment deficit that exceeds the actual deficit. B) occurs when the Treasury sells bonds to businesses. C) helps stabilize the economy. D) leads to increases in the money supply.
The above figure shows the utility of wealth curve for a homeowner whose only possession is a $50,000 house. If there is a 20 percent chance that the home could be completely destroyed, would this homeowner buy insurance?
A) No, because the homeowner is not risk averse. B) Yes, at any price because the homeowner is risk averse. C) Yes, but only if it costs less than $10,000. D) Yes, but only if it costs less than $20,000.