Scenario 1 In 2007-09, the U.S. economy went through its worst economic downturn in 30 years. As a consequence of the sharp increase in the price of housing in the U.S. in the mid-2000s, a rapid increase in the demand for oil drove up oil prices. Additionally, the collapse of the housing market, which led to Lehman Brothers’ bankruptcy, generated a financial crisis that reduced private spending.   Refer to scenario 1 and question 67. Starting from the new short-run equilibrium at point A, suppose that two additional shocks occur: (i) after the Lehman Brothers’ bankruptcy, the financial crisis worsened, reducing private spending even further; and (ii) a fall in the price of oil due to the lower private spending. If the shock in (ii) restored the SRAS curve back to its original level, what happened with prices in the new equilibrium? (call this point B)

Alex lives in Japan and purchases a Kawasaki Ninja motorcycle manufactured in China. The motorcycle is

Meela and Rayann are Canadian residents. Meela buys stock of a corporation in Austria. Rayann opens a bakery in Austria. Whose purchase, by itself, decreases Canada’s net capital outflow?

Figure 2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.   Refer to figure 2. What is true about the increase in quantities measured along the horizontal axis from 0.33 to 0.5?

Alex lives in Brazil and purchases a Kawasaki Ninja motorcycle manufactured in Japan. The motorcycle is

Crowding out occurs when investment declines because

If the exchange rate is 0.60 British pounds per $1, a bottle of pop that costs 3 pounds in Great Britain costs, in the U.S.,

Table 2   Refer to table 2. Instead, suppose the Bank of Duluth keeps no excess reserves in the T-account above. If a customer deposits an additional $5,000 into his account at the Bank of Duluth, banks keep no excess reserves and agents hold no currency in their hands, then the money supply will increase by

Which of the following could be a consequence of an appreciation of the U.S. real exchange rate?

The aggregate quantity of goods and services demanded changes as the price level rises because