If firms increase investment, the aggregate expenditures function will shift upward, other things being equal.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2As the investment demand curve becomes steeper, the crowding-out effect will become smaller.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?
a. A decrease in domestic interest rates
b. An increase in foreign interest rates
c. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices
d. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation
QUESTION 4A shift in the investment demand curve can be caused by a change in the expectations of profits by businessmen.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5Increased government borrowing stimulates private borrowing because of its effect on interest rates.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6An increase in demand for a nation's currency in the foreign exchange market will:
a. cause the nation's currency to appreciate.
b. make it more expensive for the nation to import goods.
c. cause the nation's balance on current account to shift toward a surplus.
d. make it less expensive for foreigners to buy the nation's goods.
QUESTION 7Real investment spending for the past 35 years is more volatile than real personal consumption.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8An increase in a budget deficit financed by borrowing can increase interest rates and reduce investment spending thereby creating lower rates of economic growth.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 9A nation's trade deficit will expand when its:
a. currency appreciates.
b. economy is shrinking.
c. investment environment is less attractive to foreigners.
d. all of these are true.
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