Discuss the roles that rising and falling interest rates play in causing shifts of the entire AD curve.
What will be an ideal response?
If real interest rates fall, it will cost less to take loans out for major purchases, so business investment will increase and aggregate demand will shift to the right. If real interest rates rise, it will cost more to take loans out for major purchases, so business investment will decrease and aggregate demand will shift to the left.
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One effect of immigration is to:
A. Decrease a nation's total output and productive capacity B. Make capital resources less scarce relative to labor C. Decrease economic efficiency on a worldwide basis D. Increase the wage bill in a nation experiencing immigration if the demand for labor is elastic
If marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost ________ and average variable cost ________
A) increases; decreases B) decreases; decreases C) increases; increases D) decreases; increases
Everything else held constant, a shift in tastes in the U.S. toward Mexican goods will ________ net exports in the U.S. and cause the quantity of aggregate output demanded to ________ in Mexico
A) decrease; rise B) decrease; fall C) increase; rise D) increase; fall
One of the consequences of preventing wages from falling in the European Union has been growing unemployment
a. True b. False Indicate whether the statement is true or false