As the price level decreases real GDP demanded increases because
A. consumer wealth increases.
B. net exports decrease.
C. interest rates decrease and cause lower investment.
D. net exports are indeterminant .
Answer: A
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If one Mexican peso was worth 0.05 U.S. dollar, then one U.S. dollar would be worth:
a. 20 Mexican pesos. b. 0.05 Mexican pesos. c. 0.05 U.S. dollars. d. 20 U.S. dollars. e. 1 Mexican peso.
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?
a. Both countries could gain from trade with each other. b. Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods. c. Neither country could gain from trade with each other because neither one has a comparative advantage. d. Oatland could gain from trade between the two countries, but Cornland definitively would lose.
According to the circular flow diagram, in return for land, labor, capital and entrepreneurial ability, households receive _______________________________.
Fill in the blank(s) with the appropriate word(s).
Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:
A. Bianca's reservation price was $60, and Sebastian's reservation price was $50. B. Sebastian's reservation price was $45. C. Bianca's reservation price was $65. D. Bianca's reservation price was $45.