Other things the same, an increase in the real exchange rate raises U.S. net exports
a. True
b. False
Indicate whether the statement is true or false
False
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If the quantity of goods and services produced in an economy decreases,
A) it may be possible for nominal GDP to increase. B) real GDP will certainly increase. C) nominal GDP will certainly decrease. D) it may be possible for real GDP to increase.
For a normal good, does the income effect reinforce the substitution effect or does it partly offset the substitution effect?
What will be an ideal response?
A consumer has preferences over two goods, X and Y. Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis. At the consumer's current consumption bundle, the consumer is spending all available income, and the marginal rate of substitution is greater than
the slope of the budget constraint. We can conclude that the consumer a. is currently maximizing satisfaction subject to the budget constraint. b. could increase satisfaction by consuming more X and less Y. c. could increase satisfaction by consuming less X and more Y. d. could purchase more X and more Y and increase total satisfaction.
A change in wages creates a substitution and income effect on the quantity of labor supplied.
Answer the following statement true (T) or false (F)