1. In the open-economy macroeconomic model, if investment demand increases, then
ID: 1251909 • Letter: 1
Question
1. In the open-economy macroeconomic model, if investment demand increases, thena. net exports fall and the real exchange rate rises.
b. net exports and the real exchange rate rise.
c. net exports rise and the real exchange rate falls.
d. net exports and the real exchange rate fall.
2. The aggregate demand and aggregate supply graph has
a. quantity of output on the horizontal axis. Output can be measured by real GDP.
b. quantity of output on the horizontal axis. Output can be measured by the GDP deflator.
c. quantity of output on the vertical axis. Output can be measured by real GDP.
d. quantity of output on the vertical axis. Output can be measured by the GDP deflator.
Explanation / Answer
1. d. net exports and the real exchange rate fall. 2. b. quantity of output on the horizontal axis. Output can be measured by the GDP deflator.
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