Refer to the figure. Assuming this market is representative of the economy as a whole, a negative demand shock will:
A. cause inflation.
B. increase unemployment.
C. lower prices but leave output unaffected.
D. reduce both prices and output.
C. lower prices but leave output unaffected.
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In theory, price discrimination
a. Reduces the number of consumers who purchase the firm's product b. Decreases producer surplus c. Decreases consumer surplus d. Has no effect on deadweight loss
A rise in the domestic interest rate leads to capital inflows, which make the exchange rate appreciate.
Answer the following statement true (T) or false (F)
In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange model is the
a. nominal exchange rate. b. nominal interest rate. c. real exchange rate. d. real interest rate.
The effect of opening trade between countries is
A. living standards rise in the country with efficient, high-pay workers. B. both countries can exploit comparative advantage and increase productivity. C. total world production increases as both countries specialize in specific goods. D. All of the above are correct.