In a Keynesian model, what are the short-run effects on output, the real interest rate, and the real exchange rate, for both the domestic economy and a foreign economy, of a decline in investment?
What will be an ideal response?
The IS curve shifts down and to the left, causing Y to decline and r to decline. The decline in Y causes imports to decline and NX to increase. The effect on the exchange rate is ambiguous, because the increase in NX causes the exchange rate to rise, while the decline in r causes it to fall. The increase in NX causes NXrFor to decline, which causes the foreign IS curve to shift down and to the left, causing YFor and rFor to decline.
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Which of the following best represents collectivization costs?
A) Dinesh has to spend time and effort to make sure that the chemical factory is living up to the agreed upon bargain that it will reduce the pollution it is releasing into the local river by 50 percent. B) Laila needs to come up with enough cash to pay the owners of the paper manufacturing plant, its attorneys, accountants, and negotiators so that a bargain can be reached with the paper manufacturer to reduce air pollution. C) Esperanza has to spend time and effort locating and organizing all the other people who have been adversely affected by the strong odors emanating from the local slaughterhouse in order to initiate the bargaining process. D) Rafael has to spend time determining whether the fertilizer manufacturer, the lead smelter, or the oil refinery is the cause of pollution seeping into the groundwater in his local community.
If a country has attracted a relatively large number of foreign workers and a large amount of foreign investment,
a. national income will generally exceed gross national product. b. gross national product will generally exceed gross domestic product. c. net domestic product will generally exceed gross domestic product. d. gross domestic product will generally exceed gross national product.
The figure below depicts the short-run market equilibrium in a perfectly competitive market and the cost curves for a representative firm in that market. Assume that all firms in this market have identical cost curves.
A starting assumption about this industry was that all of the firms in the market had identical cost curves. This assumption is:
A. unrealistic because firms closely guard the details of their production processes. B. realistic because firms rarely seek out cost-saving innovations. C. unrealistic because each firm is unique. D. realistic because any cost-saving innovation adopted by one firm will be quickly adopted by others.
Which statement is true?
A. Virtually everyone agrees that the federal minimum wage rate should be raised. B. Virtually everyone agrees that the federal minimum wage rate is currently too high. C. Many people believe that the federal minimum wage rate is too high, while many others believe it is too low. D. Most people agree that the federal minimum wage rate is just about at the right level.