The more substitutable current consumption is with future consumption, the more likely it is that an increase in the interest rate will cause an increase in savings.
Answer the following statement true (T) or false (F)
True
Rationale: The substitution effect causes a decrease in current consumption when the interest rate increases, while the wealth effect causes the opposite (assuming current consumption is a normal good).
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Other things being equal, a decrease in an economy's exports will
A. decrease domestic aggregate expenditures and the equilibrium level of GDP. B. increase domestic aggregate expenditures and the equilibrium level of GDP. C. increase the amount of imports consumed by the private sector. D. have no effect on domestic GDP because imports will offset the change in exports.
Which of the following would cause a leftward shift in the demand curve for a good?
A) an increase in income B) an increase in the price of a complementary good C) an increase in the price of a substitute D) the expectation that there will be a shortage in the availability of the good
In long-run equilibrium, a perfectly competitive firm will produce an output level at which its long-run average cost curve is upward sloping
a. True b. False Indicate whether the statement is true or false
In the equation of exchange, "PQ" stands for
A) GDP. B) Real GDP. C) nominal investment. D) real investment.