In the Keynesian cross model, when the level of aggregate demand in an economy is above the 45-degree line, ____
a. the level of aggregate expenditures in the economy will be lower than the level of output
b. inventories will fall below the planned level
c. businesses will decrease their level of production
d. there will be an unexpected decrease in the sales of businesses
b
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Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model has a comparative advantage in manufacturing output. What will happen to the amount of land used in producing agricultural output when trade occurs?
a. It will fall. b. It will rise. c. It will not change. d. It will first fall, then rise.
Suppose the market price for one unit of a good is $12.50, and 50 units will be exchanged at that price. If a price floor is imposed at $12.00 per unit, the price will: a. fall to $12.00, and quantity will fall below 50 units
b. fall to $12.00, and quantity will remain at 50 units. c. remain at $12.50, and quantity will rise above 50 units. d. remain at $12.50, and quantity will remain at 50 units.