At the equilibrium real interest rate in the open-economy macroeconomic model
a. saving = domestic investment
b. saving = net capital outflow
c. net capital outflow = domestic investment
d. net capital outflow + domestic investment = saving
d
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Suppose manufacturers introduce a new model car to replace a car currently included in the CPI basket. The price of the new car is 10 percent higher than the discontinued model, but the new car has additional safety features and amenities. In this situation the CPI will tend to ________ inflation as a result of ________ bias.
A. accurately measure; substitution B. overstate; quality adjustment C. overstate; substitution D. understate; quality adjustment
A demand curve that has constant price elasticity of demand coefficient equals to one at all points is a(n):
a. rectangular hyperbola. b. downward-sloping straight line. c. upward-sloping straight line. d. none of these.
Equilibrium GDP
a. is not affected by nominal wage adjustments b. represents the level of output at which public welfare is maximized c. in the long run is equal to the average of the short-run GDP equilibria d. is influenced by long-run adjustments in the labor market e. falls if aggregate demand increases
A species of snakes became extinct due to pollution in a river where the snakes once lived. This is an example of
a. a market failure caused by an externality. b. a market failure caused by market power. c. a market failure caused by equality. d. There is no market failure in this case.