The different effects of fiscal and monetary policy in an open economy with mobile capital hinges on their different effect on
A. price levels.
B. interest rates.
C. the money supply.
D. real GDP.
Answer: B
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There is a government budget surplus if
A) G > T. B) G > TR. C) T - TR > G. D) TR < T.
According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is
A) their cultural affinity. B) the average weight/value of their traded goods. C) their colonial-historical ties. D) the distance between them. E) the number of different product varieties produced by their industries.
Changes in the interest rate
a. shift aggregate demand whether they are caused by changes in the price level or by changes in fiscal or monetary policy. b. shift aggregate demand if they are caused by changes in the price level, but not if they are caused by changes in fiscal or monetary policy. c. shift aggregate demand if they are caused by fiscal or monetary policy, but not if they are caused by changes in the price level. d. do not shift aggregate demand.
The natural rate of unemployment
a. is constant over time. b. varies over time, but can't be changed by the government. c. is the unemployment rate that the economy tends to move to in the long run. d. depends on the rate at which the Fed increases the money supply.