A fall in the price level
A. causes exports to rise and imports to fall, leading to an increase in total planned real expenditures.
B. leads to an increase in total planned real expenditures because of the indirect effect.
C. increases the real value of money balances, which causes borrowing to decrease, leading to a decrease in investment and total planned real expenditures.
D. causes total planned real expenditures to increase as long as the fall is less than the fall in the price level in other countries.
Answer: A
You might also like to view...
If the quantity of corn is such that the marginal cost of corn is greater than the marginal benefit of corn, then I. there is a deadweight loss. II. more than the efficient quantity of corn is produced
A) Only I is correct. B) Only II is correct. C) Both I and II are correct. D) Neither I nor II is correct.
Which ratio correctly highlights the similarity between neoclassical theory and Tobin's q theory?
A) the marginal product of capital divided by the user cost of capital B) a firm's stock value divided by the value of its capital stock C) a firm's capital stock divided by the value of its inventories D) a firm's investment spending divided by the user cost of capital
Refer to the graph shown. Given the quantity restriction of QR, a reduction in demand will:
A. have no impact on market price. B. raise equilibrium price. C. lower the market price. D. raise equilibrium quantity.
Which of the following will not cause an increase in U.S. gross exports?
A. An increase in foreign business investment. B. A decrease in U.S. imports. C. An increase in foreign consumer income. D. An increase in foreign wealth.