In the long-run, if the economy is operating at the full employment level, the equilibrium level of real GDP is determined solely by the:
a. level of unemployment in the economy.
b. rate of inflation in the economy.
c. real interest rate in the economy.
d. aggregate supply curve of the economy.
e. aggregate demand curve of the economy.
d
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People will buy more of a normal good when their income decreases
Indicate whether the statement is true or false
Why is the multiplier for contractionary fiscal policy smaller in an open economy?
A) Contractionary fiscal policy reduces the deficit, which raises the interest rate, which raises the foreign exchange value of the dollar, which increases net exports. B) Contractionary fiscal policy increases the deficit, which raises the interest rate, which reduces the foreign exchange value of the dollar, which increases net exports. C) Contractionary fiscal policy reduces the deficit, which reduces the interest rate, which reduces the foreign exchange value of the dollar, which decreases net exports. D) Contractionary fiscal policy reduces the deficit, which reduces the interest rate, which reduces the foreign exchange value of the dollar, which increases net exports.
When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator
a. True b. False Indicate whether the statement is true or false
A free-trade area is:
a. a group of countries that agrees there will be "no rules" about trade—anything goes. b. a group of countries that agrees to eliminate customs fees and containerized shipping charges on goods traded among them. c. a group of countries that agrees to eliminate barriers to trade between themselves while keeping tariffs in place against the rest of the world. d. a group of countries that eliminates trade barriers among themselves and erects a common tariff against all other nations