When the price level in the United States rises, then net exports should
a. rise and equilibrium real GDP should increase.
b. fall and equilibrium real GDP should increase.
c. fall and equilibrium real GDP should decrease.
d. rise and equilibrium real GDP should decrease.
c
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Refer to Figure 3-4. If the price is $15
A) there would be a shortage of 400 units. B) there would be a surplus of 300 units. C) there would be a surplus of 400 units. D) there would be a shortage of 300 units.
If strong aggregate demand is pushing the economy beyond potential real GDP, which of the following must be true?
A) Expansionary monetary policies will push the economy back to the long-run Phillips curve. B) The economy is at an equilibrium that is not on the long-run Phillips curve. C) The economy is at an equilibrium that is on the long-run aggregate supply curve. D) The economy is at an equilibrium that is on the long-run Phillips curve.
Assume that the fixed exchange rate system of 100 pesos = 1 dollar is above the equilibrium exchange rate of 90 pesos= 1 dollar in a flexible exchange rate system. Then the dollar would be
a. undervalued and the peso would be overvalued. b. overvalued and the peso would be undervalued. c. revalued. d. depreciated and the peso would be appreciated.
An underproduction of goods occurs when there is _____
a. free riding b. government production c. holdout d. eminent domain