In an open economy, the domestic real interest rate is determined by:
A. domestic investment.
B. domestic saving and net capital inflows.
C. domestic saving and domestic investment.
D. domestic saving, domestic investment, and net capital inflows.
Answer: D
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Which of the following is not in the index of leading economic indicators?
A) Average workweek B) Initial unemployment claims C) Building permits D) Producer price index
According to the traditional Keynesian school of thought, expansionary fiscal and monetary policy will: a. increase interest rates, thereby shifting the investment function to the right. b. reduce both consumption and investment spending, thereby eliminating all inflationarypressures
c. reduce investment spending, thereby stabilizing the aggregate supply shocks. d. stimulate both consumption and investment spending, thereby increasingaggregate demand. e. shift the aggregate demand curve to the left, thereby reducing the unemployment rate.
What is willingness to pay?
a. The maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. b. A measure of the value that a buyer places on a good. c. The amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. d. The amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
According to prospect theory, what strategy will firms typically employ with regard to pricing and packaging of their goods, when faced with rising production costs?
A. Firms will increase both package sizes and prices but will increase prices more to communicate to consumers that the product has greater value. B. Firms will reduce package sizes but keep prices the same, thus increasing the per unit price of the good. C. Firms will keep package sizes the same but lower prices and attempt to cover the higher costs with greater revenue. D. According to prospect theory, the choice of strategy doesn't matter, as consumers are generally able to recognize price increases regardless of what form they take.