Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run
What happens in the long run? Show a diagram to illustrate the short- and long-run effects in both countries.
Domestic country: output falls, real interest rate rises, and net exports rise
Foreign country: output falls, real interest rate falls, and net exports fall.
There are no real effects in the long run.
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Suppose that due to a poor economy, 1 million workers lost their jobs, causing the unemployment rate to increase to 10%. After a few months of searching, 300,000 of these unemployed workers give up looking for work. How would the decision by these 300,000 people affect the unemployment rate, all else equal?
A) The unemployment rate would remain unchanged. B) There is not enough information to answer this question. C) The unemployment rate would increase. D) The unemployment rate would decrease.
A traffic light at an intersection is
a. rival and excludable in consumption. b. not rival but excludable in consumption. c. rival but not excludable in consumption. d. not rival and not excludable in consumption.