In the long-run ISLM model and with everything else held constant, the long-run effect of a fall in net exports is to ________ real output and ________ the interest rate
A) increase; increase
B) increase; not change
C) not change; increase
D) not change; decrease
D
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Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will
a. cause the consumer to buy more of good Y and less of good X. b. cause the consumer to buy more of good X and less of good Y. c. not affect the amount of goods X and Y that the consumer buys. d. result in an upward-sloping demand for good Y because of the substitution effect.
If a nation is going to achieve its full potential, it must have
A) a low rate of savings and a high rate of current consumption. B) a mechanism to attract savings and channel them into productive investment projects. C) low real interest rates. D) a central planning agency to allocate investment funds.
If the marginal cost of pollution abatement is smaller for large firms than it is for small firms, then it is efficient for:
A. small firms and large firms to increase pollution by a fixed proportion. B. small firms and large firms to reduce pollution by a fixed proportion. C. small firms to reduce pollution by more than large firms. D. large firms to reduce pollution by more than small firms.
It is profitable to hire labor so long as the:
A. MPL is less than wage. B. VMPL is less than wage. C. VMPL is greater than wage. D. MPL is greater than wage.