In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds
a. only if the asset is located at home.
b. only if the asset is located abroad.
c. whether the asset is located at home or abroad.
d. None of the above is correct.
c
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In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables
A) less; less B) more; more C) more; less D) less; more
Keynesian analysis stresses that a tax cut that increases the government's budget deficit or reduces its budget surplus:
a. is appropriate during a period of inflation. b. will increase the money supply. c. will stimulate aggregate supply and, thereby, promote employment. d. will stimulate aggregate demand and, thereby, promote employment.