The open economy effect suggests that
A. a rise in domestic price level will cause domestic residents to buy fewer imported goods.
B. a rise in domestic price level will cause foreign residents to buy more domestic goods.
C. a decrease in domestic price level will cause foreign residents to buy fewer domestic goods, increasing net exports.
D. a decrease in domestic price level will cause foreign residents to buy more domestic goods, increasing net exports.
Answer: D
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When the economy is at full employment the
A) natural unemployment rate is equal to 0 percent. B) natural unemployment rate equals the unemployment rate. C) natural unemployment rate is equal to 10 percent. D) unemployment rate is equal to 0 percent.
Refer to Figure 18-1. Europe suffers a recession. Assuming all else remains constant, this would be represented as a movement from
A) A to D. B) A to B. C) D to A. D) B to C. E) C to D.
For the late 19th and the first half of the 20th century, which of the following did NOT occur?
(a) The demand for foreign goods declined relatively as domestic income expanded. (b) Population soared. (c) Government intervention in market affairs slowed considerably. (d) The competitive economy fueled industrialization in the U.S.
What does the dotted line between C and D represent?
a. excess production
b. excess consumption
c. aggregate expenditure
d. aggregate production