If net exports are equal to net foreign investment, which of the following is not true?
A) The balance on the financial account is zero.
B) The current account balance is equal to the negative of the financial account balance.
C) Net capital inflows are equal to imports minus exports.
D) The balance of payments is zero.
A
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Suppose Ann can produce 8 units of a material good (M) or 4 units of a spiritual good (S) in a day, while Ben can produce only 3 Ms or 3 Ss in a day. Both Ben and Ann can potentially produce a larger combination of M and S if
A) Ann produces both M and S and Ben produces neither. B) Ann specializes in M and Ben specializes in S and neither of them trade. C) Ann specializes in S and Ben specializes in M and they exchange with one another. D) Ann specializes in M and Ben specializes in S and they exchange with one another.
A market failure arises when an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event
Indicate whether the statement is true or false
A perfectly inelastic demand schedule:
A. rises upward and to the right but has a constant slope. B. can be represented by a line parallel to the vertical axis. C. cannot be shown on a two-dimensional graph. D. can be represented by a line parallel to the horizontal axis.
When an aggregate demand shock hits the economy ________
A) there is no conflict for the central bank between pursuing price or output stability because of the divine coincidence B) the same long-run equilibrium real interest rate is reached whether the central bank intervenes or not C) the long-run level of output is unaffected D) all of the above E) none of the above