Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, in the short run:
A. market price rises from P0 to P1 and the firm's output rises from q0 to q1.
B. market price remains at P0 because perfectly competitive firms can't earn positive economic profit.
C. the firm's output remains at q0 because perfectly competitive firms can't earn positive economic profit.
D. market price rises from P0 to P1 and the firm's output rises from Q0 to Q1.
Answer: A
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The balanced-budget multiplier is equal to the
A) the autonomous spending multiplier. B) government spending multiplier plus the tax multiplier. C) simple multiplier minus the tax multiplier. D) government spending multiplier plus the simple multiplier.
In the open-economy macroeconomic model, if there is a surplus in the market for foreign-currency exchange, which of the following will move the market to equilibrium?
a. the real exchange rate depreciates and net exports fall. b. the real exchange rate depreciates and net exports rise. c. the real exchange rate appreciates and net exports fall. d. the real exchange rate appreciates and net exports rise.