For each of the following changes, what happens to the real interest rate and output in the long run, after the price level has adjusted to restore general equilibrium? How would the results differ, if at all, between the classical and Keynesian model? Draw a diagram for each part to illustrate your result.(a)Wealth rises.(b)Money supply rises.(c)The future marginal productivity of capital increases.(d)Expected inflation declines.(e)Future income declines.
What will be an ideal response?
| (a) | The IS curve shifts up and to the right, so r rises and Y rises. |
| (b) | The LM curve shifts down and to the right, so r falls and Y rises. |
| (c) | The IS curve shifts up and to the right, so r rises and Y rises. |
| (d) | The LM curve shifts up and to the left, so r rises and Y falls. |
| (e) | The IS curve shifts down and to the left, so r falls and Y falls. |
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An increase in which of the following factors can lead to sustained growth of a nation in the Solow model?
A) Physical capital B) Technology C) Human capital D) Savings rate
Refer to Table 2-12. Honduras has a comparative advantage in the production of
A) sailboats. B) canoes. C) both products. D) neither product.
By 1913, steel making by Bessemer converter had been completely surpassed by
(a) continuous casting integrated mills. (b) the Basic Oxygen furnace. (c) electric furnaces. (d) open hearth furnaces.
Suppose a firm's technology is represented by the Cobb-Douglas production function F(L, K) = 5LK. The wage rate is $50 and the rental rate of capital is $10. What is the least-cost combination to produce 100 units of output?
What will be an ideal response?