In recent decades, a primary source of long-run growth in U.S. output has been:
A. Increased capacity utilization.
B. A reduction in structural unemployment.
C. Increased output per worker.
D. Rapid growth of the money supply.
C. Increased output per worker.
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When the government increases its borrowing in the loanable funds market, the likely result is ________ loanable funds traded at a ________ interest rate.
A. fewer; higher. B. more; higher. C. more; lower. D. fewer; lower.
Your roommate argues that he can think of no better situation than living in a deflationary economy, as prices of goods and services would continuously fall. You disagree and argue that during a deflation, people can be made worse off because
A) the purchasing power of the currency would decrease. B) the value of the real interest rate will drop below the nominal interest rate. C) borrowers will have to pay increasing amounts in real terms over time. D) the purchasing power of people's incomes would increase.
45° line diagrams show how
a. investment varies with income. b. expenditures vary with income. c. investment spending rises when GDP rises. d. GDP is affected by government purchases.
Describe the gravity model of international trade.
What will be an ideal response?