Consider the long-run theory of investment, saving, and growth. In the long-run version of our macro model (with real GDP equal to Y"), the equilibrium interest rate is determined where O a. desired saving equals desired consumption. O b. the nominal price level equals the real price level. Oc aggregate demand equals aggregate expenditure. O d. desired consumption equals desired investment. O e. desired national saving equals desired investment.

Consider the long-run theory of investment, saving, and growth. In the long-run version of our macro model (with real GDP equal to Y"), the equilibrium interest rate is determined where O a. desired saving equals desired consumption. O b. the nominal price level equals the real price level. Oc aggregate demand equals aggregate expenditure. O d. desired consumption equals desired investment. O e. desired national saving equals desired investment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 1 In the neoclassical model, if the economy starts out on the LRAS (Long Run Aggregate Supply curve), with GDP equal to potential GDP, but then aggregate demand shifts to the left for any reason, what effect will this have in the long run? O a. Inflation O b. Higher real GDP Oc. Deflation and lower real GDP O d. Inflation and higher real GDP e. Deflation O f. Lower real GDP
Question 32 If you are told that a country's nominal GDP decreased and its real GDP decreased over the same block of time, which of the following can you conclude with certainty? o The economy had inflation. O None of the choices listed is correct since none can be concluded with certainty. o The economy's price level remained constant. O The economy had disinflation o The economy had deflation. Question 33 Assume the economy of a trading partner enjoys a high rate of growth, interest rates in the economy decrease, and there is an improvement in productivity. Which of the following is correct? o The equilibrium price level will definitely decrease. O The equilibrium price level will definitely increase. o The equilibrium real GDP will definitely decrease. O The equilibrium real GDP will definitely increase.
Potential GDP is O a. a measure of the short term fluctuations in real GDP. O b. another name for nominal GDP. O c. equal to the maximum amount of goods and services that can be produced at any given time. O d. the level of output produced when the economy is fully employed. O e. another name for real GDP.
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This graph is for the Canadian economy. Price Level a Select one: O Y₁ Real GDP What could have caused the increase in aggregate demand from AD1 to AD2? AD1 O O AD2 a. A higher Canadian dollar exchange rate. b. A decrease in the number of American tourists in Canada. c. An economic expansion in the United States. d. Less American direct investment in Canada. than those in Canada.
Refer to the figure at right, which shows the supply of national saving and investment demand as functions of the interest rate. Suppose the investment curve, I, shifts to the left. In the new equilibrium, the economy will have a O A. lower inflation rate. OB. higher rate of capital accumulation. OC. higher long-run rate of growth. O D. lower long-run rate of growth. Real Interest Rate NS Quantity of National Saving ($)
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When imports rise, net exports (We'll reuse this information in the next two questions.) rises; rises O rises; falls O falls; falls and aggregate demand falls; rises
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