Economies of scale lead to declining long-run average cost curves
a. True
b. False
Indicate whether the statement is true or false
True
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In 1993, the debate heated up in the United States about the North American Free Trade Agreement (NAFTA), which proposed to reduce barriers to trade (such as taxes on or limits to imports) among Canada, the United States, and Mexico
Some people opposed strongly the agreement, arguing that an influx of foreign goods under NAFTA would disrupt the U.S. economy, harm domestic industries, and throw American workers out of work. How might a classical economist respond to these concerns? Would you expect a Keynesian economist to be more or less sympathetic to these concerns than the classical economist? Why?
A fall in the price level
A) increases the real value of money balances, which causes borrowing to decrease, leading to a decrease in investment and total planned real expenditures. B) causes exports to rise and imports to fall, leading to an increase in total planned real expenditures. C) leads to an increase in total planned real expenditures because of the indirect effect. D) causes total planned real expenditures to increase as long as the fall is less than the fall in the price level in other countries.
The Bretton Woods system
a. fixed exchange rates in terms of U.S. dollars b. fixed exchange rates in terms of all major currencies c. fixed exchange rates in terms of gold d. established a system of flexible exchange rates e. established the European monetary system
An increase in the money supply decreases the equilibrium interest rate and shifts the aggregate-demand curve to the right
a. True b. False Indicate whether the statement is true or false