If the income-expenditure multiplier equals 2.5 and a 1 percent increase in the real interest rate reduces autonomous spending by 200 units, then a 1,000 unit expansionary gap can be eliminated by ________ the real interest rate by ________ percent.
A. increasing; 2.5
B. increasing; 2.0
C. decreasing; 2.0
D. increasing; 4.0
Answer: B
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If the government imposes a maximum price on rental apartments that is below the equilibrium price, we can expect to see all of the following except:
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For developing countries, one of the dangers inherent in the inflows of capital that finance investment is
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If the exchange rate is constant and U.S. exports increase, then in the foreign exchange market the
A) supply of U.S. dollars increases. B) demand for U.S. dollars increases. C) demand for U.S. dollars decreases. D) quantity of U.S. dollars demanded decreases. E) quantity of U.S. dollars demanded increases.