If a nation's currency appreciates in the short run its net exports and aggregate demand are most likely to change in which of the following ways?
a. decrease; decrease
b. decrease; increase
c. increase; decrease
d. increase; increase
e. no change; decrease
Answer: a. decrease; decrease
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Activities that encourage faster growth are
A) high levels of consumption and low levels of savings. B) high levels of saving and investment in human capital. C) imposing trade barriers to limit international trade and thereby protect national industries. D) limiting property rights so that everyone can use any invention. E) taxes on saving that serve to encourage more spending and less saving.
Suppose Colby buys 20 gallons of gasoline a week when gas costs $3.00 a gallon and only 18 gallons of gasoline when it costs $3.25 . What is Colby's elasticity of demand for gasoline?
a. -1.32 b. -1.02 c. -1.52 d. -1.42
If the U.S. were to revert to a gold standard, trade deficits would:
A. result in higher domestic interest rates. B. quickly disappear. C. result in high inflation. D. result in gold reserves in the U.S. increasing.