For this question, assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that households decide to increase consumption because of, for example, an increase in consumer confidence. Given this information, we would expect which of the following to occur?
A) an increase in the domestic interest rate
B) a reduction in E
C) an increase in E
D) an increase in investment
E) none of the above
D
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In the short run, a firm cannot change the amount of capital it uses. Therefore the cost of capital is a
A) short-run cost. B) variable cost. C) productivity cost. D) fixed cost. E) marginal cost.
In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change
A) income and hold everything else constant. B) tastes and preferences and hold everything else constant. C) the price of a close substitute and hold everything else constant. D) the price of the product and hold everything else constant.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to:
A. increase. B. decrease. C. remain unchanged. D. increase and then decrease.