The Balance Of Payments

The balance of payments is a summary statement of a nation's transactions with the rest of the world during a year. The balance of payments is divided into three major sections I. The Current Account, which shows flows of goods and services and government grants. II. The Capital Account, which shows flows of investments and loans. (A statistical discrepancy may also be included here since it refers mostly to unreported capital transactions.) III. The Official Reserve Account, which shows the...

Scarcity And The Market System

What are the distinguishing characteristics of a capitalist market economy 7 In a capitalist market economy also referred to as a free-enterprise or laissez-faire system , most economic resources are owned directly or indirectly by individuals rather than by the government. 2 Individuals are free to rent out the resources they own for the highest price they can obtain. Individuals are also free to spend their income to buy goods and services that maximize their satisfaction. Entrepreneurs...

Changes In Aggregate Output

Use aggregate demand and aggregate supply curves AD and AS in Fig. 4-15 to answer the following a Is the aggregate supply curve Keynesian or classical b Find the economy's equilibrium level of output and price level. c Does an increase in government spending, ceteris paribus, shift aggregate demand AD or aggregate supply AS d What happens to equilibrium output and the price level when government spending increases, ceteris paribus e Suppose there is a technological advance rather than an...

The Functions Of Money

9.1. a How does the use of money promote efficient production and help allocate good and services b Explain the importance of money's standard of value function to an economy. a Producers use money rather than commodities to pay for the services of economic resources. Owners of economic resources are thereby free to seek employment that maximizes their money income rather than employment that provides payment in specific commodities. This promotes the efficient use of limited economic...

Multiple Choice Questions

When there is an increase in lump-sum taxes, the consumption function a shifts upward by the increase in taxes, ceteris paribus, b shifts downward by the increase in taxes, ceteris paribus, c shifts upward by the MPC times the increase in taxes, ceteris paribus, d shifts downward by the MPC times the increase in taxes, ceteris paribus. 2. Which of the following statements is true a An increase in lump-sum taxes increases personal disposable income, ceteris paribus. b A decrease in welfare...