An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply
a. True
b. False
Indicate whether the statement is true or false
True
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According to the concept of framing effects:
A. advertising power is limited because of the inability of firms to change consumers' perspectives. B. all people will assign the same utility to a given situation, regardless of their previous status quo. C. whether a new situation is viewed as a gain or a loss depends on one's starting position. D. firms should never raise prices or reduce wages.
In the long run, when the Fed increases the quantity of money the
A) no real variable changes. B) price level falls. C) real interest rate rises. D) nominal interest rate falls.
Asymmetric information describes a situation in which
a. one side of the market – buyer or seller – has more information about the good than does the other side. b. advertising dominates whatever information consumers have about the good c. only the seller has information about the good d. only the buyer has information about the good e. price is unknown until market day
Employers in a city must pay a specific tax of $t per hour worked by their employees while employers in the suburbs of the city do not have an employment tax. What does a general equilibrium approach predict regarding the wages and employment of both the city and suburban workers if the city decides to substantially reduce their employment tax rate?
A) Wages will increase in the city, but not in the suburbs, and employment will increase in both. B) Wages will increase in both the city and the suburbs, but employment will fall in both. C) Wages will increase in both the city and suburbs, employment will increase in the city, but decrease in the suburbs. D) Wages will increase in both the city and the suburbs, employment will decrease in the city, but increase in the suburbs.