The term "price setter" refers to a firm that faces a downward-sloping demand curve and must therefore set the combination of output and price that will maximize the firm's profits

A model or theory in economics is:

A) based mostly on value judgments. B) built using relevant observations, assumptions, and abstractions. C) only useful if it correctly portrays the real world and its complexities. D) useful only if it is based on normative economic statements.

If there is an increase in foreign financial investment in the United States as the result of large U.S. budget deficits and attractive interest yields,

a. fiscal policy will be more expansionary since there will be no crowding-out effect. b. fiscal policy will be more expansionary since U.S. residents will increase their savings, so they can repay the foreigners in the future. c. foreign exchange value of the dollar will depreciate, which will lead to an increase in net exports and aggregate demand. d. foreign exchange value of the dollar will appreciate, which will lead to a decrease in net exports and aggregate demand.