Imagine that the economy is at a point on that is below both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?
A) The economy will stay at this level in the short run.
B) The exchange rate will first rise to a point on the AA schedule.
C) The exchange rate will first rise to a point on the DD schedule.
D) The AA-DD equilibrium will shift to the position of the economy.
E) The output level will first increase to a position on the DD schedule.
B
You might also like to view...
Suppose the people of Florencia spend $60 and save $40 for every $100 they earn. In this case, the marginal propensity to save equals _____
a. 0.2 b. 0.7 c. 0.4 d. 0.8
The most prestigious stock market in the world is the
A) New York Stock Exchange. B) Chicago Mercantile Exchange. C) London Stock Exchange. D) Tokyo Stock Exchange.
If laborers become more efficient over time, and if Company X would want to expand production, it would
A. substitute capital for labor. B. produce less product. C. hire more laborers. D. hire fewer laborers.
If the marginal propensity to save is 0.35, the multiplier is 2.86
Indicate whether the statement is true or false