Ceteris paribus, if the average price level falls, then the _____ effect will result in _____ in the purchases of goods and services.

A. Real balances; an increase
B. Foreign trade; a decrease
C. Interest rate; a decrease
D. Cost; an increase

Answer: A. Real balances; an increase

Economics

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Refer to Table 7-6. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume?

A) 50 B) 70 C) 90 D) 120

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If the marginal rate of technical substitution for a cost minimizing firm is 10, and the wage rate for labor is $5, what is the rental rate for capital in dollars?

A) .5 B) 1 C) 2 D) 10

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