The law of comparative advantage explains why
What will be an ideal response?
individuals as well as countries can benefit from specializing in the activities they do best.
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Under a fixed exchange rate system, the central bank of a country experiencing a balance of payments surplus will:
A) increase the supply of domestic currency to prevent currency depreciation. B) increase the demand for domestic currency to prevent currency depreciation. C) increase the supply of domestic currency to prevent a currency appreciation. D) increase the demand for domestic currency to prevent a currency appreciation.
Table 36-2 ? Domestic ? ? ? GDP Expenditure ? Exports Imports Total Expenditures (Y) C+ I + G (X) (IM) C+ I + G + (X?IM) $2,500 $3,100 $650 $250 _____ 3,000 3,400 650 300 _____ 3,500 3,700 650 350 _____ 4,000 4,000 650 400 _____ 4,500 4,300 650 450 _____ 5,000 4,600 650 500 _____ 5,500 4,900 650 550 _____ In Table 36-2, what is equilibrium GDP?
A. $2,500 B. $3,500 C. $4,500 D. $5,500
Less money supply
What will be an ideal response?
If the Fed wants to try to stimulate the economy, ________
A) it lowers spending B) it lowers its short-run interest rate target C) it increases tax rates D) it reduces money supply