Explain the relationship between U.S. net exports and the prosperity of trading partners for the United States.
What will be an ideal response?
An increase in the real output and incomes of the trading partners for the United States improves U.S. net exports because it means foreigners will have more real income to purchase more U.S. exports. If U.S. exports rise and U.S. imports remain constant, then U.S. net exports will increase, thus contributing to an increase in aggregate expenditures.
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A government subsidy paid to a firm i. increases the demand for the good. ii. has no effect on the supply of the good. iii. leads to an increase in the equilibrium quantity
A) i only B) i and ii C) ii only D) iii only E) i and iii
If the interest rate is 5 percent, the net present value of $200 to be received two years from now is
a. $165.29. b. $181.41. c. $200. d. $210.
What effect does a contractionary monetary policy in the U.S. have on the foreign trade sector?
A. The lower value of the dollar will decrease imports and increase exports. B. The higher value of the dollar will decrease imports and increase exports. C. The higher value of the dollar will decrease exports and increase imports. D. The lower value of the dollar will decrease exports and increase imports.
Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.
Figure 24.5Refer to Figure 24.5. If the economy is in equilibrium and the government decreases spending by $100 billion, equilibrium aggregate output decreases to $________ billion.
A. 1,500 B. 1,400 C. 1,200 D. 800