Using an aggregate demand graph, illustrate the impact of an increase in the growth rate of U.S. GDP relative to the growth rate of foreign GDP

What will be an ideal response?


The increase in the growth rate of U.S. GDP relative to the growth rate of foreign GDP will cause U.S. imports to increase faster than U.S. exports, and net exports will fall. This will result in a parallel leftward shift in the aggregate demand curve. We start on the curve AD1 and the increase in the growth rate of U.S. GDP relative to the growth rate of foreign GDP will move us to AD2. At the price level P1, the quantity of real GDP demanded declines from Y1 to Y2.

Economics

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A decrease in the demand for dollars on the foreign exchange market, all else equal, will result in:

A) appreciation of the U.S. dollar and depreciation of the foreign currency. B) appreciation of the U.S. dollar and appreciation of the foreign currency. C) depreciation of the U.S. dollar and depreciation of the foreign currency. D) depreciation of the U.S. dollar and appreciation of the foreign currency.

Economics

The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

A. total product optimization. B. increasing rate of return. C. production function. D. diminishing marginal product.

Economics

Answer the following statement true (T) or false (F)

1) Farmers typically sell their products in highly competitive markets and buy in imperfectly competitive markets. 2) If the demand for agricultural products is inelastic, a relatively small increase in supply will cause farm prices and incomes to decline. 3) The use of price-support programs in agriculture has hastened the exodus of resources from agriculture. 4) The concept of parity has provided a rationale for government price supports for farm products.

Economics

A non-discriminating monopolist maximizes total revenue when its marginal revenue is

A. equal to price. B. negative. C. zero. D. positive.

Economics