As the price level rises,
a. the exchange rate falls, so net exports fall.
b. the exchange rate falls, so net exports rise.
c. the exchange rate rises, so net exports fall.
d. the exchange rate rises, so net exports rise.
c
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For an economy starting at potential output, an increase in investment in the short run results in a(n):
A. recessionary output gap. B. increase in potential output. C. expansionary output gap. D. decrease in potential output.
Everything else held constant, an increase in the riskiness of bonds relative to alternative assets causes the demand for bonds to ________ and the demand curve to shift to the ________
A) rise; right B) rise; left C) fall; right D) fall; left
If labor costs rise at the same time that the federal government decreases its purchases, in the short run
A) aggregate output and the price level will both increase. B) aggregate output will increase, but the price level will fall. C) aggregate output and the price level will both fall. D) aggregate output will fall, but the price level may either increase or decrease.
Sadie just bought a new karaoke machine to replace her old one. Her old one works perfectly fine and would sell on Craigslist for $50. The fact that Sadie would not pay $50 for it, yet continues to let it sit in her closet unused is explained by:
A. the implicit cost of ownership. B. the cost of admitting she likes karaoke. C. ignored sunk costs. D. irrationally considering sunk costs.