Assume a country experiences heavy capital outflows. What is the first round effect on the value of the domestic currency?
a. The value of the currency rises.
b. The value of the currency is unaffected.
c. The value of the currency falls.
d. The change in the value of the currency is ambiguous.
.C
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In the Solow model, if saving per worker initially exceeds investment per worker,
A) the economy will experience inflation. B) the capital—labor ratio will increase. C) investment per worker will decline. D) saving per worker will decline.
Given the aggregate demand curve, a beneficial supply shock will:
a. increase potential output and the price level b. decrease potential output and the price level. c. increase potential output and decrease the price level. d. decrease potential output and increase the price level. e. cause no change in potential output or the price level.
Refer to Table 8.1. Assume that the relevant time period is the short run. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, this firm's total cost of producing one unit of output is A) $100. B) \$120. C) $220. D) indeterminate from this information.
An interior solution to a consumer's utility maximization problem implies
A) consuming a positive amount of all goods. B) consuming negative amounts of all goods. C) consuming less than optimal amounts of all goods. D) consuming more than an optimal amount of at least one good.