Author Question: Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, ... (Read 91 times)

TFauchery · **on:** Jun 29, 2018

Similar to imports, U.S. exports depend on the level of U.S. real GDP so that if real GDP increases, U.S. exports increase. Explain whether the previous sentence is correct or incorrect.

What will be an ideal response?

Question 2

The supply of loanable funds schedule shows that the

A) higher the real interest rate, the more the supply of loanable funds curve shifts rightward.
B) higher the real interest rate, the greater the quantity of loanable funds supplied.
C) higher the real interest rate, the greater the opportunity cost of supplying loanable funds.
D) higher the real interest rate, the lower the profit from making new investment.
E) lower the real interest rate, the greater the quantity of loanable funds supplied.

blakcmamba · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The sentence is incorrect along two dimensions. First, U.S., exports do not depend on U.S. real GDP. Indeed, U.S. exports are part of autonomous spending. Second, because U.S. exports do not depend on U.S. real GDP, they definitely do not increase when U.S. real GDP increases.

Answer to Question 2

B