Suppose the U.S. dollar gains strength against the euro (and against other major currencies). This strengthening of the dollar will cause which of the following to occur?
A. The aggregate demand curve will shift to the right and the short-run aggregate supply will shift to the right.
B. the aggregate demand curve will shift to the left and the short-run aggregate supply will shift to the left.
C. The aggregate demand curve will shift to the right and the short-run aggregate supply will shift to the left.
D. The aggregate demand curve will shift to the left and the short-run aggregate supply will shift to the right.
Answer: D
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In an open economy, a decrease in net exports because of reduced demand for domestic products by foreigners should cause the domestic real interest rate to ________ and should cause desired saving minus desired investment to ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.50, which of
the following statements is true? A) Happy Bagels is holding the profit-maximizing, optimal level of inventory. B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory. C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory. D) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to double its inventory.
In the classical theory of the employment an increase in the rate of interest will ______ savings and ________ investment.
Fill in the blank(s) with the appropriate word(s).
A tax rebate by the government would
A) increase your pretax income, but not your disposable income. B) increase your disposable income, but not your pretax income. C) decrease your pretax income, but not your disposable income. D) decrease your disposable income, but not your pretax income.