If the natural rate of unemployment declines ________
A) labor is more heavily utilized
B) potential output increases
C) the long run aggregate supply curve shifts to the right
D) all of the above
E) none of the above
D
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The two neighbors of the United States do a lot more trade with the United States than European economies of equal size
A) This contradicts predictions from gravity models. B) This is consistent with predictions from gravity models. C) This is irrelevant to any inferences that may be drawn from gravity models. D) This is because these neighboring countries have exceptionally large GDPs. E) This relates to Belgium's trade record with the U.S.
The circular flow model is all of the following except
a. an abstraction from reality b. a model of two markets c. a model of two agents d. a simple economic model e. designed to aid policy makers