In an open economy, an increase in net exports because of increased demand for domestic products by foreigners should cause the domestic real interest rate to ________ and should cause desired saving minus desired investment to ________
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
A
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Refer to Table 2-12. What is Honduras's opportunity cost of producing one canoe?
A) 1/5 of a sailboat B) 1.5 sailboats C) 5 sailboats D) 6 sailboats
The cost of capital and the cost of debt should be identical when economic profits are positive
Indicate whether the statement is true or false
As long as a market is contestable, then even if it has only a few sellers, the
a. threat of new entrants will prevent the prices from rising above the competitive level. b. producers will be able to charge prices that are high enough to produce long-run economic profits. c. producers will not face new competition because the barriers to entry are high. d. market will never be expected to come close to the competitive result.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline