An increase in the demand for our exports
a. increases aggregate demand and income by the amount of the investment multiplier.
b. increases imports as well, having no impact on aggregate demand.
c. increases aggregate demand and income by less than the amount of the investment multiplier.
d. does not impact aggregate demand because this is consumption by foreign countries.
A
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In Gelate, Pennsylvania, the market for compact discs has evolved as follows. There are two firms that each use a marquee to post the price they charge for compact discs. Each firm buys CDs from the same supplier at a cost of $5.00 per disc. The inverse market demand in their area is given by P=10-2Q=, where Q is the total output produced by the two firms.
a) Solve for the Bertrand equilibrium price and market output. b) Would your answer differ if the products were not perfect substitutes? Explain.
Suppose you have one hour to catch a flight to Miami for spring break, and it takes 45 minutes to drive to the airport. Your car is almost out of gas and the price of gas at the closest gas station is higher than at other gas stations that are much farther away. To you, the price elasticity of demand for gas is likely to be ________ than it would be if you had several hours before the flight.
A. lower B. more variable C. no different D. higher
Which of the following does not determine fiscal policy?
A. Congress through tax laws. B. The Federal Reserve. C. Congress through government expenditures. D. The president.
A firm considering whether to borrow money to purchase a capital good will compare the rate of interest for the loan with the:
A. Opportunity cost of the capital good B. Rate of return on the investment C. Length of the investment D. Treasury bill rate