If the world economy expands so that foreign demand for U.S.-made goods increases, in the short run what will happen to aggregate demand, the price level, and real GDP in the U.S.?
What will be an ideal response?
Net exports increase so U.S. aggregate demand increases. The U.S. price level and real GDP both increase.
You might also like to view...
The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?
A) 0-20 B) 0-25 C) 20-25 D) greater than 25
The MP curve may be used to represent how ________
A) movements of the inflation rate are determined by the real interest rate B) monetary policy responds to changes in the real interest rate C) movements of the real interest rate are related to the inflation rate D) all of the above E) none of the above
Refer to the table below. If Sweet Grams is a perfectly competitive firm and the market price $1.25 per unit, what is the profit-maximizing quantity for Sweet Grams to produce at Plant 2?
Sweet Grams makes graham cracker snack packages. Sweet Grams is a multi-plant firm with two production facilities. The above table summarizes the total marginal cost of production at various output levels in the separate plants. Assume Sweet Grams is a perfectly competitive firm.
A) 32,000
B) 30,100
C) 27,000
D) 22,500
Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The tax that would have to exist to achieve the socially optimal level of production would be
a. $0 b. $.50 c. $1 d. $2