In the classical model, investment spending is
a. positively related to the level of income
b. positively related to the interest rate
c. negatively related to the interest rate
d. unrelated to the interest rate
e. negatively related to the price level
C
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The United States has a comparative advantage and specialize in the production of airplanes. Compared to the situation with no trade, which of the following will occur?
A) More airplanes will be produced in the United States. B) There will be no change in the price of airplanes in the United States. C) The world price of airplanes will increase. D) The quantity of airplanes demanded in the United States will increase.
Explain how a bubble can develop in the market for an asset
What will be an ideal response?
In the United States since 1970, the quantity of M1 money people hold as a percentage of GDP has
A) decreased. B) remained constant. C) decreased at first and then increased. D) increased at first and the decreased. E) increased.
Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?
A) a decrease in the population B) a decrease in the price of orange juice processing C) an increase in the cost of fertilizer used for orange groves D) a decrease in income, assuming orange juice is a normal good