Suppose the U.S. economy is producing at the natural rate of output. A depreciation of the U.S. dollar will cause ________ in real GDP in the short run and ________ in inflation in the short run, everything else held constant
(Assume the depreciation causes no effects in the supply side of the economy.) A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease
A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Under a fixed exchange rate regime, if the domestic currency is initially undervalued, that is, above par, the central bank must intervene to sell the ________ currency by purchasing ________ assets
A) domestic; foreign B) domestic; domestic C) foreign; foreign D) foreign; domestic
In the dominant firm model, the fringe firms
A) are price takers. B) maximize profit by equating average revenue and average cost. C) determine their price and output before the dominant firm determines its price and output. D) all of the above E) none of the above
All of the following are examples of goods for which external costs commonly exist EXCEPT
A) cigarettes. B) automobiles. C) vaccinations. D) oil transportation.