8. Imagine a Small open economy in the Classical theory. What happens to NX and real exchange rate if aggregate savings go down?
a) NX goes into deficit and real exchange rate rises.
b) NX goes into deficit and real exchange rate falls.
c) NX goes into surplus and real exchange rate rises.
d) NX goes into surplus and real exchange rate falls.
9. Imagine that the economy is at the intersection of LRAS, SRAS and AD curves. Suppose that a shock lowers the SRAS curve. What kind of stabilization policy can be taken to return the economy to the long run level of Y?
a)Raise money supply
b)Lower money supply
c)Keep money supply unchanged
d)None of the above
10. Actual Expenditure < Planned Expenditure means that firms will
a)Raise production
b)Lower production
c)Keep production unchanged
d)None of the above
8. Imagine a Small open economy in the Classical theory. What happens to NX and real exchange rate if aggregate savings go down?
a) NX goes into deficit and real exchange rate rises.
b) NX goes into deficit and real exchange rate falls.
c) NX goes into surplus and real exchange rate rises.
d) NX goes into surplus and real exchange rate falls.
9. Imagine that the economy is at the intersection of LRAS, SRAS and AD curves. Suppose that a shock lowers the SRAS curve. What kind of stabilization policy can be taken to return the economy to the long run level of Y?
a)Raise money supply
b)Lower money supply
c)Keep money supply unchanged
d)None of the above
10. Actual Expenditure < Planned Expenditure means that firms will
a)Raise production
b)Lower production
c)Keep production unchanged
d)None of the above
Related textbook solutions
Related questions
| 10. | The long-run aggregate supply curve (LRAS) is Y = Yf, which depends on the amounts of resources and the level of technology innovation. If a country has more resources and better technology, which of the following is true? | ||||||||||||||||
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| 11. | Suppose the wage rates of workers are based on the expected price level. If there is an unexpected increase in AD, it will cause the actual price level to increase. Then workers should raise their expected price level and negotiate a higher wage rate. Then which of the following is most likely to be true when the expected price increases? | ||||||||||||||||
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| 12. | Suppose the economy is in the long-run equilibrium, i.e., Y = Yf, and there is an unexpected decrease in AD. Assume that Yf is fixed, then which of the following is most likely to be true? | ||||||||||||||||
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| 13. | The short-run (SR) equilibrium is the intersection between AD and SRAS, and long-run (LR) equilibrium is the intersection between AD and LRAS. Every LR equilibrium is a SR equilibrium, but a SR equilibrium is not always the LR equilibrium. If an economy is operating at a SR equilibrium where Y > Yf, which of the following will occur in the process toward the new LR equilibrium when the economy corrects itself? | ||||||||||||||||
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| 14. | From the Keynesians, Y = C + I + G + NX can be transformed into a theoretical model. In particular, assume that the consumption C = A + mpc (Y-T), where A is a constant, mpc is the marginal propensity to consume, Y is national income and T is income taxes. Suppose in the goods market equilibrium, aggregate expenditure = national income such that the two Y's will be the same from Y = A + mpc (Y-T) + I + G+ NX. . Suppose C = 400 + 0.75(Y â T). G = 100, I = 100, T = 100, and NX = 150, what is the Y in the goods market equilibrium? (All of the variables are in terms of million dollars) | ||
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| 15. | Continue to assume that C = 400 + 0.75 (Y - 100), I = 100, and NX = 150. But the government now increases spending from 100 to 200, how much is the new Y in the goods market equilibrium? | ||||||||||||||||
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| 16. | Continue to assume that C = 400 + 0.75 (Y - 100). Then which of the following is true? | ||||||||||||||||
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| 17. | Suppose the federal government needs to balance the budget, which means that when the government spending increases, taxes must increase equally. In this case, government spending multiplier is called the balanced-budget multiplier, defined as the increase in real GDP/increase in government spending. By following the example from the previous question, how mcuh is the balanced-budget multiplier? | ||||||||||||||||
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The economy is in equilibrium, TP = TE, and Real GDP is $4,555 billion. The MPC is 0.80, the multiplier is operative, and idle resources exist at each expenditure round. Government purchases rise by $10 billion. As a result, the __________ curve shifts __________, inventory levels unexpectedly __________, business firms ___________ the quantity of goods and services they produce, and Real GDP __________ by __________.
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