If a country experiences a trade surplus, then

If the multiplier is 5 and if there is no crowding-out effect, then a $40 billion increase in government expenditures causes aggregate demand to

Table 1  Refer to table 1. Based on the price earnings (PE) ratio alone, the price of which of the following companies would be mostly likely to fall?

To decrease the money supply, the Fed could

If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?

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

Scenario 2 In October 2013, President Obama and the Republican Party faced a debate regarding tax increases and government spending cuts (the so-called government shutdown). A temporary solution was reached until February 2014, when the debate started again.   Refer to scenario 2. Suppose that President Obama and the Republican Party did not reach an agreement. Hence, taxes increase and government expenditure fell in February 2014. Within the framework of the AD-SRAS-LRAS model discussed in class, what would happen with prices and output in the U.S. economy if it initially starts in a situation of long-run equilibrium?

Hailey deposits money into an account with a nominal interest rate of 5 percent. She expects inflation to be 2 percent. The tax rate is 30 percent. Hailey’s after-tax real rate of interest

If inflation is lower than what was expected,

According to the principle of monetary neutrality, in the long-run, a decrease in the money supply will not change