An increase in domestic output would cause a ________ in net exports and a ________ in the exchange rate.
A. rise; rise
B. rise; fall
C. fall; rise
D. fall; fall
Answer: D
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An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model,
A) the price level will increase, but real GDP will not change. B) the price level and real GDP will increase at the same time. C) the price level will increase, but real GDP will decrease. D) the price level will rise first, then real GDP will increase.
With regard to transition economies what is meant by shock therapy?
What will be an ideal response?
Firms in perfect competition are price takers because:
a. all small firms must take the price set by the largest firm in the market b. firms take the price that government determines is a "fair" price c. each firm is too small relative to the market to be able to influence price d. free entry and exit in the short run creates a constant market price in the long run e. high barriers to entry force firms to compete by charging lower prices than other firms in the industry
If the price of gasoline increases, what will be the impact in the market for public transportation?
A) The quantity of public transportation demanded decreases. B) The quantity of public transportation demanded increases. C) The demand curve for public transportation shifts to the right. D) The demand curve for public transportation shifts to the left.