If there is more production of final goods in the economy, then income ___.
A. will fall
B. might fall
C. will rise
D. might rise
Ans: C. will rise
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Suppose supply decreases, but there is no change in demand. As the market reaches its new equilibrium:
A. excess supply will lead the price to rise. B. excess demand will lead the price to rise. C. excess supply will lead the price to fall. D. excess demand will lead the price to fall.
In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts up and to the right, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, it will
A) shift the LR curve up. B) not shift the LR curve. C) shift the LR curve down. D) shift the IS curve up and to the right.
Is the European Monetary Union a form of dollarization? Explain.
What will be an ideal response?
Given high transactions costs, the best way to deal with a positive externality is
A. to allow both parties to negotiate. B. to limit the extent of the externality. C. to subsidize it. D. to tax it.