The economy experiences an increase in the price level and an increase in real domestic output. Which is a likely explanation?
A. Interest rates have increased.
B. Net exports have increased.
C. Wage rates have fallen.
D. Business taxes have increased.
Answer: B
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If Daniel has budget constraint C in the graph shown, what would cause it to shift to budget constraint B?
This graph shows three different budget constraints: A, B, and C.
A. An increase in the price of milk
B. A decrease in the price of soda
C. An increase in the price of soda
D. None of these changes alone could cause a shift from C to B.
If a good is normal and its price decreases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.
If the Environmental Protection Agency (EPA) directs an old lace factory to install an expensive water purification system to treat its wastes before they are discharged into the river,
a. the price of lace will fall b. the lace factory may go out of business c. this directive is unenforceable d. the private cost curve will shift to the right e. more lace is sold so the factory can cover the higher costs
When the Fed uses monetary policy targets, they cannot use both a money supply target and an interest rate target at the same time because
A. It is easier for the Fed to keep track of, and influence, the interest rate B. Interest rates are determined by money supply and money demand that the Fed does not control money demand C. The Fed is only allowed to choose one target at a time to publish the Congress