In an open economy, an increase in savings because of concerns about the future should cause the domestic real interest rate to ________ and should cause net exports to ________
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
C
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The figure above shows the production possibilities frontier for a country. The opportunity cost of a gallon of milk between combination point A and B is
A) 1/3 of a gallon of ice cream for a gallon of milk. B) 4 gallons of ice cream for a gallon of milk. C) 1 gallon of ice cream for a gallon of milk. D) 3 gallons of ice cream for a gallon of milk. E) zero because at point A, zero milk is being produced.
Real business cycle theory states that the most important cause of business cycles is
A) shocks to the money supply. B) interest rate shocks. C) Federal Reserve policy decisions. D) shocks to tastes and technology.
According to the mercantilists, colonies were supposed to export ________ and import ________ from _______
a. manufactured products, raw materials, the mother country. b. raw materials, manufactured products, countries outside the empire. c. manufactured products, raw materials, countries outside the empire. d. raw materials, manufactured products, the mother country.
Which of the following might cause the demand for ice cream, a normal good, to increase?
a. an increase in the price of ice cream b. an increase in the price of sherbet c. cooler weather d. a decrease in the number of consumers e. a decrease in consumer income