If a government increases its budget deficit, then interest rates
a. rise and the real exchange rate appreciates.
b. fall and the real exchange rate depreciates.
c. rise and the real exchange rate depreciates.
d. fall and the real exchange rate appreciates.
a
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Refer to the figure above. If Lithasia does not engage in international trade, what is the domestic production of pens?
A) 0 units B) 6 units C) 12 units D) 16 units
The market value of all final goods and services in an economy produced by resources owned by people of that economy, regardless of where the resources are located, is
a. gross domestic product b. gross national product c. net national product d. national income e. gross private domestic investment
Which of the following is an example of adaptive expectations?
a. James hears that many companies are laying off people and decides not to change his job at this time b. Kirsten reads about the continuous rise in the prices of necessary goods and the simultaneous rise in the level of unemployment and knows that the country is heading for stagflation. c. Kate knows that inflation is on the rise and that the best strategy for her firm would be to lower the price of its product. d. Peter knows that the Federal Reserve is planning to lower interest rates next month and decides to apply for a loan.
In a diagram of aggregate demand and supply curves, the AD shortfall is measured as the
A. Horizontal distance between the aggregate demand curve necessary for full employment and the aggregate demand curve that intersects AS at the equilibrium price. B. Vertical distance between the recessionary GDP gap and the inflationary GDP gap. C. Horizontal distance between the equilibrium output and the full-employment output. D. Vertical distance between the equilibrium price and the price at which the aggregate demand would intersect aggregate supply at full employment.