Assume individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose current government spending increases and that individuals expect future government spending to increase. Given this information, we know with certainty that
A) current output and the current interest rate will both increase.
B) current output will not change.
C) future expected output will decrease.
D) future expected output will not change.
C
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What balance of payment account records foreign investment between countries?
What will be an ideal response?
Refer to Table 19-8. Suppose that a simple economy produces only four goods and services: sweaters, CDs, sugar, and soft drinks
Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households. Calculate nominal GDP for this simple economy.
For a rational consumer, the income elasticity of demand for common salt is: a. greater than one. b. smaller than one. c. equal to one
d. equal to zero.
All else being equal, if the rate of growth in productivity in Spain is greater than the rate of growth in productivity in the United States, the euro
A) will decrease in value relative the U.S. dollar. B) will nominally depreciate against the dollar, but its real value relative to the dollar will remain unchanged. C) will increase in value relative to the U.S. dollar. D) will nominally appreciate against the dollar, but its real value relative to the dollar will remain unchanged.