To encourage more investment, Mexico has lowered its tax rates to reduce the user cost of capital. Argentina is unable to pay back its foreign debts, causing its expected future marginal product of capital to fall. Mexico's real exchange rate will ________ and its net exports will ________.
A. appreciate; fall
B. depreciate; fall
C. depreciate; rise
D. appreciate; rise
Answer: A
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Firms will hire additional workers as long as the wage:
A. is greater than the marginal product of labor. B. is less than the value of the marginal product of labor. C. equals the marginal product of labor. D. is less than the marginal product of labor.
The only type of business that faces limited liability is a corporation
Indicate whether the statement is true or false
The Keynesian cause-and-effect sequence predicts that an increase in the money supply will cause interest rates to:
A. fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP. B. fall, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP. C. rise, cutting investment and shifting the AD curve rightward, leading to an increase in real GDP. D. rise, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
Suppose the actual budget deficit increases when the economy falls into a recession. This is an indication that
A) monetary policy was used during the recession. B) monetary policy was not used during the recession. C) fiscal policy was used during the recession. D) fiscal policy was not used during the recession.