Figure 36-7
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In Figure 36-7, there are three aggregate expenditure functions (C + I + G + X? IM) for an open economy. Which of the following would cause a movement from A to B?
A. a European economic expansion
B. A decrease in the money supply
C. An increase in the interest rate
D. An increase in the U.S. price level
Answer: A
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Encouraging international trade will
A) slow economic growth as many workers lose their jobs to foreign workers. B) speed economic growth as workers specialize and trade with others. C) speed economic growth because international trade limits the harm done by property rights. D) slow economic growth when a country is forced to specialize and trade with other countries. E) speed economic growth as workers diversify their knowledge and limit trade.
If the economy is at full employment
A) the entire population is employed. B) the entire labor force is employed. C) the only unemployment is frictional unemployment plus discouraged workers. D) real GDP equals potential GDP.
A shift in the demand curve will occur when
A) supply shifts. B) the price of an input used to produce the good changes. C) consumers' income changes. D) the price of the product changes.
The Gauss-Markov Theorem proves that
A) the OLS estimator is t distributed. B) the OLS estimator has the smallest mean square error. C) the OLS estimator is unbiased. D) with homoskedastic errors, the OLS estimator has the smallest variance in the class of linear and unbiased estimators, conditional on X1,…, Xn.