When developing classical models, there is an assumption that wages and prices will remain fixed relative to changes in supply and demand
Indicate whether the statement is true or false
FALSE
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Net exports include goods produced
A) domestically that are sold abroad, less goods that are produced abroad that are sold domestically. B) domestically that are sold abroad, less goods produced domestically that are sold domestically. C) domestically that are sold domestically, less goods produced domestically that are sold abroad. D) abroad that are sold domestically, less goods that are produced domestically that are sold abroad.
Consider a competitive market where the demand and the supply depend on the current price of the good. Then fitting a line through the quantity-price outcomes will
A) give you an estimate of the demand curve. B) estimate neither a demand curve nor a supply curve. C) enable you to calculate the price elasticity of supply. D) give you the exogenous part of the demand in the first stage of TSLS.
If households save $30 billion more at each level of income and the marginal propensity to consume (MPC) is 0.9, the aggregate expenditure line will _____
a. intersect the 45-degree line at a real GDP of $30 billion b. shift upward by $30 billion c. shift downward by $30 billion d. shift upward by $300 billion because of the multiplier effect e. shift downward by $300 billion because of the multiplier effect
A steel company sells some steel to a bicycle company for $150 . The bicycle company uses the steel to produce a bicycle, which it sells for $250 . Taken together, these two transactions contribute
a. $150 to GDP. b. $250 to GDP. c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. d. $400 to GDP.