From 2001 to 2004 the U

question 212

Multiple Choice

From 2001 to 2004 the U.S.budget went from surplus to deficit.This should have

• A)increased U.S.interest rates and increased the real exchange rate of the dollar.
• B)increased U.S.interest rates and decreased the real exchange rate of the dollar.
• C)decreased U.S.interest rates and increased the real exchange rate of the dollar.
• D)decreased U.S.interest rates and decreased the real exchange rate of the dollar.

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Definitions:

Allocative Efficiency

The apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers); the output of each product at which its marginal cost and marginal benefit are equal, and at which the sum of consumer surplus and producer surplus is maximized.

Marginal Costs

The additional cost incurred by producing one more unit of a good or service, crucial for making production and pricing decisions.

Marginal Benefits

The incremental satisfaction or benefit a consumer derives from consuming an additional unit of a good or service.

Net Benefits

The total benefits of a decision or project after subtracting all the costs associated with it.