What effects does operating in an open economy add to expansionary monetary policy? To contractionary monetary policy?
Expansionary monetary policy would decrease interest rates in the U.S. That would reduce real interest in the U.S. relative to other countries, which would make investing in the U.S. relatively less attractive relative to other countries. That would reduce the demand for dollars, lowering the exchange rate value of the dollar, which would lead to an increase in net exports (as well as domestic investment) and aggregate demand. Contractionary monetary policy would have the opposite effects.
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When crowding out occurs in an economy, it can reduce expenditures for
A. business investments. B. both consumer purchases and business investments. C. consumer purchases. D. government purchases.
Monopoly firms have a downward sloping curve in the short-run because
a. They have no close substitutes b. There are no barriers to entry c. They have no cost advantage over their rivals d. None of the above
During the Cold War era, the U.S.:
A. gave foreign aid to promote their communistic support. B. gave foreign aid, while the Russians demanded reparations from many of the same countries. C. gave foreign aid to prevent the spread of communism, while Russia did the same in an effort to align countries with the Communist bloc. D. did not engage in any foreign aid because of the severe cost of fighting the war.
A movement along a demand curve
a. is called a change in demand. b. is the result of a change in the price of the good. c. can be caused by many things. d. means the product is inelastic.