Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; higher
C. lower; higher
D. higher; potential
Answer: D
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The economic hardship resulting from a financial crises is severe, however, there are also social consequences such as
A) increased crime. B) difficulty getting a loan. C) currency devaluations. D) loss of output.
The nominal interest rate parity condition states that
A) domestic and foreign assets must have nominal returns that are identical, irrespective of the characteristics of the assets. B) when domestic and foreign assets have identical risk, liquidity, and information characteristics, their nominal returns must also be identical. C) while nominal returns are equalized across all foreign and domestic assets, real returns may vary widely. D) while real returns are equalized across all foreign and domestic assets, nominal returns may vary widely.
All of the following would cause exports to decline, except:
a. a depreciation of the domestic currency. b. a decline in foreign income. c. stricter government regulations on international trade. d. a decline in foreign preferences for domestic goods. e. foreign import quotas on domestic products.
Crowding out occurs when public provision of a good substitutes for private provision.
A. True B. False C. Uncertain