Using an equation, explain why governments prefer to avoid excessive current account surpluses?
What will be an ideal response?
This follows from the national income identity, S = CA + I, which says that total domestic savings, S, is divided between foreign asset accumulation, CA, and domestic investment, I.
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When describing goods and services, what is meant by the terms "rival" and "nonrival?" Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?
What will be an ideal response?
Which of the following explains why the Fed is able to have a dramatic effect on aggregate demand and real output in the short run?
A. price confusion that speeds up the adjustment of real GDP B. money illusion that speeds up the adjustment of the price level C. sticky prices that slow the adjustment of the price level D. sticky wages that slow the adjustment of real GDP
Which of the following is NOT a condition that helps enforce a cartel agreement?
A) a small number of firms B) nearly homogeneous products C) easily observable prices D) large variation in input prices
If aggregate output is greater than planned spending, then
A. unplanned inventory investment is zero. B. unplanned inventory investment is positive. C. actual investment equals planned investment. D. unplanned inventory investment is negative.