If leakages are less than injections, ceteris paribus:
(a) National income will increase.
(b) National income will decrease.
(c) National income will stay in equilibrium.
(d) None of the above.
Answer: (a) National income will increase.
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Use the following graph, which shows the supply and demand curves for dollars in the pound/dollar market, to answer the next question,
Assume that D1 and S1 are the initial demand for and supply of dollars. Suppose that Britain's demand for dollars increases from D1 to D2. If the British government wishes to fix the exchange rate at the initial level, it should ________.
A. buy and add more to its dollar reserves B. encourage the British to import more U.S. products C. sell pounds in exchange for U.S. dollars D. sell some of its dollar reserves
The number of people employed in a country increased. Everything else remaining unchanged, this will lead to a ________
A) fall in the country's GDP B) fall in the country's consumer price index C) fall in the country's GNP D) fall in the country's income per worker
If there's an increase in the future marginal product of capital in a large open economy, it causes the current account to ________ and saving to ________
A) fall; rise B) rise; remain unchanged C) fall; remain unchanged D) rise; rise
A wage profile rises because
A) employees become more productive over time. B) employees become less productive over time. C) managers are better able to monitor employees. D) increases in the minimum wages push up other wages.