The economy of Mainland uses gold as its money. If the government discovers a large reserve of gold on their land
a. the supply of money decreases and the value of money rises.
b. the supply of money increases and the value of money falls.
c. the demand for money increases and the value of money rises.
d. the demand for money decreases and the value of money falls.
b
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Increase in supply mean a new supply (subsidy) line . . .
What will be an ideal response?
If exports are $10 trillion and imports are $10.5 trillion, adding net exports to the aggregate expenditures (AE) line that includes consumption, investment, and government spending will cause the AE line to:
A. start at the same point on the vertical axis but will have a flatter slope. B. start at the same point on the vertical axis but will have a steeper slope. C. shift up by $0.5 trillion and the new line will be parallel to the original line. D. shift down by $0.5 trillion and the new line will be parallel to the original line.
If the unemployment rate rises because the number of people not working but searching for work rises, economists would attribute this to the
A. encouraged worker effect. B. fallacy of composition. C. discouraged worker effect. D. none of the options are correct.
When countries specialize in producing those goods in which they have a comparative advantage, they
A. maximize their combined output and allocate their resources more efficiently. B. allocate their resources more efficiently, but they do not necessarily maximize their combined output. C. maximize their combined output, but they do not necessarily allocate their resources more efficiently. D. do not necessarily maximize their combined output, and they also do not necessarily allocate their resources more efficiently.