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Government fiscal policy and international trade seem to be linked. Let’s investigate their relationship.
A. Say a government is currently running a budget deficit and decides to cut taxes, increase spending, or both. Explain how this will affect interest rates in the country. (3 points)
B. Given the change in interest rates from part A, what will happen to the value of this country's currency? Explain why. (3 points)
C. Given the change in the value of the country's currency from part B, how will the price of the country's goods relative to other countries' goods change? What effect will this have on its current account?
D. What effect will all this have on the country's capital account, and how will this work to keep the balance of payments equal to zero?
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What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?
Suppose that Omar’s marginal utility for cups of coffee is constant at 5.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for th..
Describe the Malthusian projection about limits on economic growth, and discuss what factors have proven him wrong (if you think he was wrong). Or, if you think his predictions are still valuable, discuss what limiting factors, particularly demograph..
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