The J curve implies that a real depreciation will cause
A) the nominal exchange rate to appreciate in the short run and depreciate in the long run.
B) the nominal exchange rate to depreciate in the short run and appreciate in the long run.
C) net exports to fall in the short run and rise in the long run.
D) net exports to rise in the short run and fall in the long run.
C
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Whenever marginal cost exceeds marginal revenue,
a. profit declines if the firm reduces output b. profit increases if the firm increases output c. the firm should shut down d. losses decrease if the firm increases output e. profit declines if the firm increases output
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Many economists argue that the most efficient way to control pollution is to
A. ban all activities that create pollution. B. enforce legal standards on air and water quality. C. promote environmental awareness among citizens. D. impose taxes on emissions.
A rational person:
A. makes choices based on total benefits and total costs. B. undertakes activities until the net benefits become less than zero. C. considers the financial benefits and financial costs of making a choice. D. makes choices based on added benefits and added costs.