In an open economy with flexible exchange rates, monetary policy affects ________ through changes in the real interest rate and affects ________ through changes in the exchange rate.
A. taxes and saving; net exports
B. consumption and investment; net exports
C. net exports; taxes and saving
D. productivity and growth; consumption
Answer: B
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Which of the following statements is TRUE?
A) Free trade is beneficial only if your country is strong enough to stand up to foreign competition. B) Free trade is beneficial only if your competitor does not pay unreasonably low wages. C) Free trade is beneficial only if both countries have access to the same technology. D) Free trade is never beneficial for developing countries. E) Free trade can be beneficial to economic welfare of all countries involved.
Which of the following helps to classify an industry's market structure?
a. the long-run equilibrium price b. the impact of industry expansion on input prices c. the existence of barriers to entry d. the shape of the short-run average total cost curve e. the existence of economic profit in the short run
An economic variable that moves in the opposite direction as aggregate economic activity in the business cycle is called:
(a) Acyclical; (b) Procyclical; (c) Countercyclical; (d) A leading variable.
Suppose C = 1000 + .9Y, G = 400, I = 100, (X – IM) = 0, and there are no income taxes. If government purchases increase by 100, equilibrium GDP will
a) rise by 25% b) rise by a factor of 10 c) rise by 90 d) rise by 100 e) rise by 1,000