What happens to wage and rental rate according to the Heckscher-Ohlin model if the price of a good that uses capital extensively increases by 6%?
a. Both wage and rental rate decrease by 6%.
b. Both wage and rental rate increase by less than 6%.
c. Both wage and rental rate increase by more than 6%.
d. Wage rate increases by more than 6% but rental rate decreases.
e. Wage rate decreases but rental rate increases more than 6%.
e. Wage rate decreases but rental rate increases more than 6%.
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Other things remaining constant, higher trade deficits in the U.S. will lead to: a. U.S citizens buying greater foreign securities
b. an increase in domestic savings in the U.S. c. a decrease in the demand for U.S. dollars. d. an increase in funds from abroad. e. an increase in the standard of living of the U.S residents.
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Suppose the Federal Reserve raised the required reserve rate. This would lead to an increase in _____.
a. interest rates b. inflation c. deficits d. aggregate demand
If the inflation rate in the U.S. is lower than in other countries, this would be expected to
A. increase U.S. exports. B. reduce U.S. imports. C. increase the demand for dollars. D. All of the choices are true.