Under a fixed exchange rate system, if the inflation rate in the United States is 5 percent a year and the inflation rate in Australia is 0 percent a year, then the U.S. real exchange rate will
A) increase 5 percent a year. B) decrease 5 percent a year.
C) remain constant. D) possibly increase or decrease.
A
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If the economy is on the LM curve, but is to the right of the IS curve, then the ________ market is in equilibrium, but aggregate ________ exceeds aggregate ________
A) goods; output; demand B) goods; demand; output C) money; output; demand D) money; demand; output
If the social cost is greater than the private cost in a particular market, the private equilibrium will be at a quantity:
A. greater than or less than the socially optimum level, depending on the size of the external costs. B. equal to the socially optimal level. C. greater than the socially optimal level. D. less than the socially optimal level.
Answer the question on the basis of the following national income data for the economy. All figures are in billions of dollars. Personal Consumption Expenditures 400 Government Purchases 128 Gross Private Domestic Investment 88 Net Exports 7 Net Foreign Factor Income 0 Consumption of Fixed Capital 43 Taxes on Production and Imports 50 Compensation of Employees 369 Rents 12 Interests 15 Proprietor's Income 52 Corporate Income Taxes 36 Dividends 24 Undistributed Corporate Profits 22 Statistical Discrepancy 0 Refer to the above data. Net domestic product is:
a) $520. b) $580. c) $623. d) $573.
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were to open to trade, domestic prices would:
A. remain $16, with more units sold overall. B. decrease to $11 for all units. C. remain $16 for domestically produced goods, and be $23 for those units imported. D. increase to $23 for all units.