If the domestic income of a nation's citizens increase thus causing consumption spending to increase, then we generally expect net export spending to:
A. remain constant because when we increase domestic purchases it is directly offset by a reduction in foreign purchases.
B. decrease as well because as consumption increases we also buy more foreign goods and services.
C. increase as well because as consumption increases we also buy more foreign goods and services.
D. there is not enough information to determine what would happen.
Answer: B
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Explain how each of the following events would affect the supply of loanable funds curve:
a. The economy is in a recession so people's disposable income is lower. b. The stock market is booming so people's wealth is higher. c. The future looks a bit more grim, so expected future income is lower. d. The real interest rate increases.
Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What happens if Max receives a $100 cash grant to buy either meat or chicken?
A) Max will double his consumption of both meats. B) Max will spend it all on burger. Because of its lower price, he can buy more of it. C) Max will take advantage of the gift by buying all chicken because it is the more expensive meat. D) There is not enough information to answer the question.
In the long run in a perfectly competitive market:
A. firms earn positive economic profits. B. supply is perfectly inelastic when all firms have the same cost structure. C. firms operate at an efficient scale. D. All of these are true.
Questions regarding income distribution are central to deciding whether a market-based economic system is efficient
Indicate whether the statement is true or false