The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the:
A. interest rate effect.
B. international trade effect.
C. price effect.
D. wealth effect.
Answer: B
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If a country engages in trade with other countries, it is known as
A. An open economy. B. A closed economy. C. A democracy. D. A market economy.
Why is there often resistance to free trade?
A. Free trade does not benefit the economy as a whole. B. Specific groups may be hurt by free trade. C. Free trade usually hurts consumers. D. Free trade does not benefit the global economy.
The total expenditure schedule in Macroland begins with these initial levels (in billions of dollars): Income = 1,000; Consumption = 900; Investment = 200; Government = 300; Net Exports = ?100. If the MPC = 0.75 and income increases in increments of 200, find the equilibrium level of income. If full employment requires an income level of 2,000, what (if anything) should the government do? Indicate both the direction of the spending change and the size of the spending change.
What will be an ideal response?
an inflation rate in excess of 200%, lasting at least one year
What will be an ideal response?