Which of the following does NOT occur if Home starts a policy of permanent fiscal expansion:
A) Home's exchange rate increases.
B) Foreign's interest rate rises.
C) Home output rises.
D) Foreign output rises.
E) Current Account Balance increases.
E
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Economic theory is most useful in explaining the operation of social systems
A) aimed at making a living. B) directed toward the satisfaction of material wants. C) in the world of business and finance. D) in which participants characteristically don't know one another personally. E) in which people pursue selfish interests.
Refer to Figure 5-5. Suppose the current market equilibrium output of Q1 is not the economically efficient output because of an externality. The economically efficient output is Q2. In that case, diagram shows
A) the effect of an excess demand in a market. B) the effect of a subsidy granted to producers of a good. C) the effect of a positive externality in the consumption of a good. D) the effect of a negative externality in the consumption of a good.