Author Question: If a small open economy reduces its budget deficit, the result will be: A) a lower world real ... (Read 36 times)

savannahhooper · **on:** Jun 30, 2018

If a small open economy reduces its budget deficit, the result will be:

A) a lower world real interest rate, but no change in the domestic real interest rate
B) a lower domestic real interest rate, but no change in the world real interest rate
C) lower domestic and world real interest rates
D) no change in either the domestic or world real interest rate

Question 2

Acme Steel Co produces 1000 tons of steel. Steel sells for 30 per ton. Acme pays wages of 10,000. Acme buys 15,000 worth of coal, which is needed to produce the steel. Acme pays 2,000 in taxes. Acme's contribution to GDP is

A) 15,000.
B) 20,000.
C) 30,000.
D) 45,000.