According to the J curve, the rapid depreciation in the dollar from 1985 to 1987 caused net exports to
A) rise in the short run and fall in the long run.
B) rise in the short run and rise further in the long run.
C) fall in the short run and rise in the long run.
D) fall in the short run and fall further in the long run.
C
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Which of the following statements is true?
A) Data are facts established by observation and measurement. B) Theories are statistics that describe the real world. C) Hypotheses are predictions that can be tested with data. D) Empirical evidences are facts, measurements, or statistics that describe the world.
A currency depreciation affects total spending in the short run through expenditure switching, but the net external wealth effect also can influence:
A) other types of expenditure such as consumption or investment. B) the ability of the nation to keep up technologically, since new capital will be more expensive. C) the production function of the home country. D) the ability of the government to conduct monetary policy.