Consider a closed economy described by AE (aggregate expenditures) = 800,000 + 0.75Y Assume that this economy is initially in equilibrium. But now the government implements a program to improve highways that will cost $1 million. This implies that equilibrium real GDP will:
a. decrease by $1 million.
b. decrease by $4 million.
c. increase by $1 million.
d. increase by $4 million.
e. decrease by $800,000.
d
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product
What will be an ideal response?
Pure monopoly
a. is defined as having only one supplier. b. has no close substitutes for its product. c. exists when entry and survival of potential competitors is extremely unlikely. d. All of the above are correct.
The foreign exchange market is the market in which
A) foreigners buy U.S. real estate. B) foreign stocks and bonds are bought and sold. C) ideas from different countries are exchanged. D) currencies of different countries are bought and sold. E) none of the above