The J-curve effect means that import prices are higher, thus revenues paid out increase while export prices are lower and incoming revenues decrease. Therefore, after a currency depreciation:
a. the trade balance will improve, then decline, then improve, and then decline, appearing to be a series of J shapes.
b. the trade balance will increase, then decrease, then jump higher, which economists call the J-curve effect.
c. the nation will cut back on imports immediately causing the trade balance to improve, which gives the curve an inverted J shape.
d. the trade balance decreases and then increases over time giving the curve a J shape.
Ans: d. the trade balance decreases and then increases over time giving the curve a J shape.
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"Stagflation" refers to the unwelcome combination of
a. inflation and rising prices. b. deflation and unemployment. c. inflation and unemployment. d. inflation and expansion.
Recessions in Canada and Mexico would cause
a. the U.S. price level and real GDP to rise. b. the U.S. price level and real GDP to fall. c. the U.S. price level to rise and real GDP to fall. d. the U.S. price level to fall and real GDP to rise.
In a two-dimensional graph showing the relationship between income and consumption in the economy, what is shown on the vertical axis and what is shown on the horizontal axis?
Please provide the best answer for the statement.
"Full employment" refers to the situation when there is
A. 100% employment of the labor force. B. no frictional or structural unemployment. C. no cyclical unemployment. D. a 0% unemployment rate.