In an economy operating under flexible exchange rates, explain why the IS curve is downward sloping
What will be an ideal response?
A reduction in i (assume zero inflation) will cause investment to increase for reasons discussed before. This causes an increase in Z and Y. There is a second effect now embedded in the IS curve. As i falls, the demand for the domestic currency drops causing a depreciation. This depreciation causes NX to rise and demand to rise even more. So, there are two components of demand that now change as i changes: I and NX.
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Adjusted gross income is
A. any profit you have from asset sales. B. total income from all sources. C. income after deductions and exemptions are taken. D. the amount of income a taxpayer has after taxes are paid.
What is a monopolist, and what is required for a monopolist to earn profits in the long run?
What will be an ideal response?
If a firm increases its production every month, then its:
a. average fixed cost increases every month. b. average variable cost gets closer to the average total cost every month. c. average variable cost becomes equal to the average total cost. d. average fixed cost gets closer to the average total cost every month.
If consumption changes because of a change in the price level, then the
A) economy moves from one point on an AD curve to another point on the same curve. B) AD curve shifts. C) economy moves from one point on a SRAS curve to another point on the same curve. D) SRAS curve shifts. E) none of the above