Which of the following would likely cause the dollar to appreciate?
a) Lower interest rates in the United States.
b) An increase in United States citizens' preference for foreign goods.
c) Income growth of the United States lagging behind that of other countries.
d) Rising inflation in the United States.
Ans: c) Income growth of the United States lagging behind that of other countries.
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) C to B. B) A to E. C) D to C. D) C to D. E) E to A.
Consider the above figure. At a price level of 120
A) total planned real expenditures exceed total planned production. B) total planned production exceeds total planned expenditures. C) prices would fall. D) inventories would begin to accumulate.
Brandon Wallace tutors economics students. He finds that when he charges $5 per hour, students demand a total of 30 hours of tutoring per week; however, when he raises his rate to $8 per hour, they demand only 26 hours of tutoring. a . Calculate the
price elasticity of demand for Brandon's tutoring. b. Is demand for Brandon's tutoring price elastic, unit elastic, or price inelastic? Which rate should he charge to maximize his revenue? c. Brandon finds that he can raise his rate to $10 per hour during the week before final exams and students will continue to demand 26 hours of tutoring. Explain why this is so.
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending?
a. $15 million b. $85 million c. $100 million d. $118 million e. $185 million