The assumption that nothing changes EXCEPT the variables being studied is
A. normative economic analysis.
B. the rationality assumption.
C. positive economic analysis.
D. the ceteris paribus assumption.
Answer: D
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Everything else equal, the AC curve will shift when
a. the price of the product rises. b. technical change raises the MPP of one input. c. output is increased. d. increasing returns to scale are present.
A country has $60 million of saving and domestic investment of $40 million. Net exports are
a. $20 million. b. -$20 million. c. $100 million. d. -$100 million.
If borrowers and lenders expect a higher rate of inflation,
A. nominal interest rates should decrease. B. nominal interest rates should remain constant. C. nominal interest rates should increase. D. real interest rates should increase.
When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to
A) remain unchanged. B) decrease. C) increase. D) change in an unpredictable manner.