Using the II-XX framework, show using a figure that fiscal policies by themselves cannot bring the economy to both internal and external balances
What will be an ideal response?
Starting at point 2, fiscal policy is shown as only horizontal movements. This means that the economy can reach either point 3 (internal balance) or point 4 (external balance) in the figure, but not both internal and external balances. Only a devaluation of the currency accompanied with an increase in fiscal ease, namely increasing government expenditures or decreasing taxes, will move the economy to both internal and external balances at point 1 in the figure.
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If diseconomies of scale are present and the firm ________ all its inputs, its output ________
A) doubles; more than doubles B) doubles; less than doubles C) increases; increases by the same percentage D) halves; doubles
Financial intermediaries are able to act as delegated monitors for individual savers because
A) other investors are unable to gain a free ride on their monitoring efforts. B) borrowers consider this role to be traditional for financial intermediaries and are willing to put up with it. C) the federal government has granted them waivers from laws protecting privacy. D) they employ a vast network of private detectives to carry out their monitoring role.