If net exports is a negative number for a particular year, then
a. the value of firms' inventories declined over the course of the year.
b. consumption exceeded the sum of investment and government purchases during the year.
c. the value of goods sold to foreigners exceeded the value of foreign goods purchased during the year.
d. the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.
d
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Assume the marginal propensity to consume (MPC) is 0.75 and the economy is in recession with real GDP $1 trillion below full-employment real GDP. To achieve full employment, aggregate demand (AD) must be increased $2 trillion. Following discretionary fiscal policy, government spending should be increased:
a. $0.25 trillion. b. $1 trillion. c. $0.5 trillion. d. $2 trillion.
A nation's monetary base changes when:
a. Funds cross our imaginary line. b. The federal government increases spending. c. Central banks swap currencies with each other. d. The central bank reduces the reserve requirement. e. None of the above.