Q1. Suppose that two economies initially have the same level of real income and both suffer unanticipated declines in their sales of exports of $50 billion. Country "A" has higher tax rates and a higher level of government spending than economy "B". Otherwise, the two economies are similar in every respect. Which nations will suffer the maximum decline in services as a result of the decline in exports?
Q2. Use the two big questions of economics and the economic way of thinking to answer the following questions about the economic life of a homeless man.
Does he face scarcity?
Does he make choices?
Can you understand his choices as being in his own best interest?
Can either his own choices or the choices of others make him better off? If so, how?