If the interest rate in India increases, how will it affect the net exports of India?
What will be an ideal response?
If the interest rate in India increases, investors will be willing to invest in India. This will cause the demand for Indian rupees to increase. This in turn will cause the rupee to appreciate. An appreciation of the rupee will increase imports in to India and decrease exports from India.
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If real GDP grows faster than nominal GDP, it is a sign that
A) inflation is negative. B) there is no inflation. C) there is inflation, but little. D) there is galloping inflation.
One potential weakness of the coordination failure model as an explanation of business cycles is that
A) evidence supporting intertemporal substitution as an important determinant of labor supply is weak. B) evidence supporting the existence of increasing returns at the aggregate level is weak. C) it fails to explain several of the key business cycle regularities. D) it requires that consumers not behave in a rational manner.