Explain how the following will affect the relative values of the dollar and the English pound
a. Income growth is higher in the United States than in England.
b. Inflation is higher in England than in the United States.
c. Real interest rates are higher in the United States than in England.
a. The dollar will depreciate relative to the pound.
b. The dollar will appreciate relative to the pound.
c. The dollar will appreciate relative to the pound.
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If the government decreased income taxes by $500 billion and does not pursue a policy change, which of the following would require the private sector to adjust in order to finance the tax decrease?
A) Increase other taxes by $500 billion. B) Reduce transfer payments by $500 billion. C) Reduce expenditures on programs such as education or defense by $500 billion. D) Issue $500 billion in new Treasury Bonds.
Economic reasoning suggests that individuals should spend little time learning about election candidates and other electoral issues because:
a. marginal benefit is zero. b. the information cost is too high compared to the benefit to the individual. c. information is easily available. d. the result of the election are unlikely to have a serious impact on a market-driven economy.