In the globalized AS/AD model, the world supply curve is:
A. horizontal.
B. vertical.
C. downward-sloping.
D. upward-sloping.
Answer: A
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Why is the multiplier for contractionary fiscal policy smaller in an open economy?
A) Contractionary fiscal policy reduces the deficit, which raises the interest rate, which raises the foreign exchange value of the dollar, which increases net exports. B) Contractionary fiscal policy increases the deficit, which raises the interest rate, which reduces the foreign exchange value of the dollar, which increases net exports. C) Contractionary fiscal policy reduces the deficit, which reduces the interest rate, which reduces the foreign exchange value of the dollar, which decreases net exports. D) Contractionary fiscal policy reduces the deficit, which reduces the interest rate, which reduces the foreign exchange value of the dollar, which increases net exports.
Collective action is successful to the extent that it improves the welfare of those who participate in it
a. True b. False
Suppose one observes that when the price of peanut butter increases, the demand for jelly increases. One should conclude that:
A. peanut butter and jelly are inferior goods. B. peanut butter and jelly are normal goods. C. peanut butter and jelly are substitutes. D. peanut butter and jelly are complements.
Refer to the information provided in Figure 15.5 below to answer the question(s) that follow. 
Figure 15.5 Refer to Figure 15.5. Assume The Custom Sweater Shop has fixed costs of $500 and is a monopolistically competitive firm. If the firm produces the profit-maximizing level of output and sells it at the profit-maximizing price, the firm ________ of $400.
A. earns a profit B. suffers a loss C. has total cost D. has total revenue