In an open economy, an increase in savings because of concerns about the future should cause the domestic real interest rate to ________ and should cause net exports to ________.
A. fall; rise
B. fall; fall
C. rise; fall
D. rise; rise
Answer: A
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Assume the inflation rate falls from 4 percent to 2 percent. This means that
A) the price level has fallen. B) the price level is increasing more slowly. C) the economy is experiencing deflation. D) real GDP is decreasing.
In the above figure, the economy is initially at point B. If the exchange rate falls, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
In the United States, the long-run inflation rate can be expressed simply as the growth rate of money
A) plus the long-run growth rate of velocity. B) minus the long-run growth rate of velocity. C) plus the long-run growth rate of real GDP. D) minus the long-run growth rate of real GDP.
What was suggested by Keynes to move the economy out of a depressed state?
a. The invisible hand b. The price mechanism c. Monetary and fiscal policy d. Zero government intervention