Suppose the economy is in long-run equilibrium. In a short span of time, there is a pessimistic revision of expectations about future business conditions and an unexpected rise in the value of the dollar. In the short run, we would expect
a. the price level and real GDP both to rise.
b. the price level and real GDP both to fall.
c. the price level and real GDP both to stay the same.
d. All of the above are possible.
B
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A surplus in a country's trade balance means that:
a. its net exports exceed transfer payments. b. the country's currency is over-valued. c. the value of its net exports is positive. d. imports into the country exceed exports. e. domestic savings exceeds domestic investment.
The level of real GDP and the price level that equate the aggregate quantity demanded and the aggregate quantity supplied is known as macroequilibrium
Indicate whether the statement is true or false
Laura says that the present value of $700 to be received one year from today if the interest rate is 6 percent is less than the present value of $700 to be received two years from today if the interest rate is 3 percent. Cassie says that $700 saved for one year at 6 percent interest has a smaller future value than $700 saved for two years at 3 percent interest
a. Both Laura and Cassie are correct. b. Both Laura and Cassie are incorrect. c. Only Laura is correct. d. Only Cassie is correct.
The profit-maximizing and the least-cost combination of inputs are:
A. the result of unrelated decisions. B. always identical. C. such that the minimization of costs always results in profit maximization. D. such that the maximization of profits always entails the least-cost combination of inputs.