An increase in aggregate demand due to higher foreign income will cause:
a. domestic equilibrium GDP to increase.
b. domestic equilibrium GDP to decrease.
c. domestic prices to fall.
d. foreign prices to fall.
e. foreign equilibrium GDP to fall.
a
You might also like to view...
Equilibrium real income is more stable in the face of aggregate autonomous expenditure variability under
A) a floating exchange rate. B) a pegged exchange rate. C) a fixed exchange rate. D) perfect capital mobility systems.
All else equal, an increase in the government's budget deficit accompanied by a decrease in corporate taxes would definitely result in
A) an increase in the equilibrium real interest rate. B) a decrease in the equilibrium real interest rate. C) an increase in the equilibrium level of saving and investment. D) a decrease in the equilibrium level of saving and investment.
Suppose a Pigovian tax is imposed on a market that is characterized by one or more externalities. Is this a command-and-control policy or is it a market-based policy?
Which of the following occurs when consumers decide to save every penny of a tax cut, knowing that this tax cut must be financed by future tax increases?
A. Keynesian offset B. Ricardian equivalence C. Fiscal balancing D. Animal spirits