Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In 2010, a British pound cost $1.56 in U.S. dollars. In 2020, a British pound costs $1.66 in U.S. dollars. In 2010 was the pound
- In 2010, a British pound cost $1.56 in U.S. dollars. In 2020, a British pound costs $1.66 in U.S. dollars.
- In 2010 was the pound weaker or stronger than the U.S. dollar? (2 points)
- Between 2010 and 2020, did the U.S. dollar appreciate or depreciate versus the pound? (2 points)
- Calculate the cost of a U.S. Dollar in terms of British Pounds in 2020. (2 points)
- Define the concepts of budget deficit and national debt, and explain how they differ from one another. (12 points)
- The economist Arthur Laffer pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Explain how this could be true. (12 points)
- Is it possible for a nation to run budget deficits and still have its debt/GDP ratio fall? Is it possible for a nation to run budget surpluses and still have its debt/GDP ratio fall? Explain. (12 points)
- Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below.
- A recession (2 points)
- A stock market collapse that hurts consumers and business confidence (2 points)
- Extremely rapid growth of exports (2 points)
- Rising inflation (2 points)
- The economy is at its natural rate of unemployment/potential GDP/LRAS. The government decides to enact a massive increase of expenditure. (2 points)
- A rise in oil prices (2 points)
- In 2010 was the pound weaker or stronger than the U.S. dollar? (2 points)
- Between 2010 and 2020, did the U.S. dollar appreciate or depreciate versus the pound? (2 points)
- Calculate the cost of a U.S. Dollar in terms of British Pounds in 2020. (2 points)
- A recession (2 points)
- A stock market collapse that hurts consumers and business confidence (2 points)
- Extremely rapid growth of exports (2 points)
- Rising inflation (2 points)
- The economy is at its natural rate of unemployment/potential GDP/LRAS. The government decides to enact a massive increase of expenditure. (2 points)
- A rise in oil prices (2 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started