In the new Keynesian model, a positive, permanent supply shock will result in ________
A) an increase in aggregate demand
B) a decrease in aggregate demand
C) no change in aggregate demand
D) a change in aggregate demand, only if the shock is anticipated
A
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Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of coconuts in Guatemala?
A) 1/2 of a ton of pineapples B) 1 1/3 tons of pineapples C) 2 tons of pineapples D) 90 tons of pineapples
A shift in demand toward the home country's goods would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment) in the economy
A) lower; increase B) lower; decrease C) raise; increase D) raise; decrease
An official agreement with another country to restrict the quantity of its exports to the U.S. is
A) a regional trade bloc. B) the quota system. C) a voluntary import expansion. D) a voluntary restraint agreement.
If, as price increases by 10 percent, total revenue decreases by 10 percent demand is
a. elastic. b. unit elastic. c. inelastic. d. perfectly inelastic.