The___________states that in the short run, output will change as one input is varied while the others are held constant.

Fill in the blank(s) with the appropriate word(s).

Ans: Law of Variable Proportions

Economics

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Clarity Dence pays $375 for a used acoustic guitar from the local music instrument dealer. The dealer himself purchased it for $150. In principle, how would this exchange affect GDP?

A) Nothing happens to GDP, because the guitar is a used good. B) GDP increases by $150. C) GDP increases by $225. D) GDP increases by $375. E) GDP increases by $525.

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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the monetary base in the context of the Three-Sector-Model? a. The reserves account becomes

more negative (or less positive) and monetary base falls. b. The reserves account becomes more negative (or less positive) and monetary base rises. c. The reserves account becomes more positive (or less negative) and monetary base falls. d. The reserves account and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.

Economics