A short-run open-economy model with demand shocks can analyze the effect on _____ if output prices and factor prices are sticky.
A) inflation
B) real economic activity (real GDP and unemployment)
C) long-run variables
D) expectations
Ans: B) real economic activity (real GDP and unemployment)
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The additional output a firm produces by hiring one more worker is called the marginal product of labor
Indicate whether the statement is true or false
If there is a decrease in taxes on business firms in a small open economy, it causes the current account to ________ and the equilibrium amount of saving to ________
A) fall; fall B) rise; remain unchanged C) fall; remain unchanged D) rise; fall
At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP
a. True b. False Indicate whether the statement is true or false
Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price inelastic demand?