A small open economy increases its investment demand. This causes the world real interest rate to ________ and the country's current account balance to ________.
A. rise; rise
B. remain unchanged; fall
C. remain unchanged; rise
D. rise; fall
Answer: B
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A firm observes that in order to minimize the average cost, it must produce 25,000 units of output. Suppose the government imposes a specific tax on the output of the firm
Will the output level required to minimize the average cost increase, decrease, stay the same or is it uncertain? Can you tell how much the minimum average cost will change by? Explain.
A positively sloped long run average cost implies:
a. economies of scale. b. constant returns to scale. c. diseconomies of scale. d. diminishing marginal returns to a factor. e. increasing returns to scale.
The magnification of small changes in spending into larger changes in output and income is produced by:
a. The average propensity to consume b. The multiplier effect c. The average propensity to save d. Saving
Your school offers college seniors one "free" college course. Is this course also free to society?
A. Yes, because the school has satisfied the assumption of making a rational choice. B. No, because some students will not take a free class seriously and will ultimately become less productive workers. C. No, because if a college-senior takes the last seat in the class, t then a paying student will not have the opportunity to take it. D. Yes, because the seniors live in society.