A key result of the equilibrium aggregate expenditure model is that it:
A. can explain why the economy should always be at natural rate GDP.
B. illustrates how the government always moves us towards equilibrium GDP.
C. shows how classical notion that the economy will always tend towards natural rate GDP is correct.
D. can illustrate how an economy can be at an equilibrium that is below natural rate GDP.
Answer: D
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A temporary adverse supply shock directly causes
A) a shift down and to the left of the IS curve. B) a shift to the left of the FE line. C) a shift down and to the right of the LM curve. D) a shift up and to the right of the IS curve.
Helping the poor is not necessarily the same thing as promoting greater equality
a. True b. False
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). c. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. Real GDP falls, and net nonreserve-related international borrowing/lending does not change. e. There is not enough information to determine what happens to these two macroeconomic variables.
Appreciation of the dollar refers to
A. An increase in the dollar price of foreign currency. B. A loss of foreign exchange reserves. C. Intervention in international money markets. D. A fall in the dollar price of a foreign currency.