An increase in the price level causes
A. reduced investment spending, because interest rates increase, but an increase in net exports as U.S. residents buy fewer imports. The change in investment is usually greater than the change in net exports.
B. reduced investment spending, because interest rates increase and a decrease in net exports as the higher prices induce foreigners to buy fewer U.S. goods.
C. a reduction in net exports as higher priced U.S. goods induce foreigners to buy fewer American products, and an increase in investment spending as the higher prices make businesses more profitable.
D. increased government spending, which crowds out investment spending, so that the net effect on aggregate demand is nil.
Answer: B
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When a firm is experiencing diseconomies of scale, long-run
a. average total cost is minimized. b. average total cost is greater than long-run marginal cost. c. average total cost is less than long-run marginal cost. d. marginal cost is minimized.
A firm produces construction equipment, some of which it sells to domestic businesses and some of which it exports. Which of the following effects of capital flight in the country where it produces would likely increase the quantity of equipment it sells?
a. both what happens to the interest rate and what happens to the exchange rate b. what happens to the interest rate but not what happens to the exchange rate c. what happens to the exchange rate but not what happens to the interest rate d. neither what happens to the interest rate nor what happens to the interest rate.
The law of supply indicates that:
A. producers will offer more of a product at low prices than they will at high prices. B. consumers will purchase less of a good at high prices than they will at low prices. C. the product supply curve is downsloping. D. producers will offer more of a product at high prices than they will at low prices.
About 75 percent of American women over the age of 16 are in the labor force.
Answer the following statement true (T) or false (F)