The Ricardian Equivalence holds only if
A) the government is altruistic.
B) there are no binding credit constraints.
C) the government runs deficits.
D) the government runs surpluses.
B
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Clarissa Kessler operates a store that sells toys. Her business suffered tremendously when a giant discount store chain opened a store in the area and is able to sell its products for less than Clarissa's wholesale cost
Is this evidence of illegal price discrimination on the part of the discount store chain? A) No, even if the price discrimination is based on differences in cost, the law states that it is not illegal. B) No, because it can be argued that the discount store chain is justified in charging lower prices because it is a large-volume buyer and is able to purchase toys at a lower wholesale price than Clarissa. C) Yes, it is clearly a violation of the Robinson-Patman Act. D) Yes, the discount store chain is engaging in predatory pricing.
Answer the following questions briefly
(a) Is it possible for each nation to have BOP surpluses? Explain. (b) What is the "statistical anomaly" that imparts a bias to trade balances? (c) Is it correct to argue that deficit countries are harmed while surplus countries benefit by international free trade? (d) How is the balance of payments linked to national saving and investment?