Aggregate demand will increase if:
a) Consumption falls
b) Investment falls
c) Exports fall
d) Imports fall
Answer: d) Imports fall
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Most Americans would voluntarily support defense without required taxation
a. True b. False Indicate whether the statement is true or false
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and nominal value of the domestic currency falls. b. The GDP Price Index falls, and nominal value of the domestic currency remains the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. The GDP Price Index rises, and nominal value of the domestic currency rises. e. The GDP Price Index falls, and nominal value of the domestic currency rises.
As a result of the decrease in the price of hamburger, consumers buy more hamburger and fewer frankfurters. This is an illustration of:
a. The income effect b. The substitution effect c. Consumer sovereignty d. Changing tastes and preferences
Consider a two-country, two-commodity model. Each country has an increasing-cost production-possibility curve. In this model the amounts of the goods that are produced in a country in the no-trade situation are determined by:
A. the factor endowments in the economy. B. total income in the economy. C. the relative prices of the goods. D. technology differences between the industries.