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Author Question: Which of the following will always cause an increase in net exports? A) a reduction in domestic ... (Read 116 times)

bobbysung

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on: Jun 30, 2018
Which of the following will always cause an increase in net exports?
 
  A) a reduction in domestic output
  B) an increase in the real exchange rate
  C) an increase in government spending
  D) an increase in investment
  E) all of the above

Question 2

Based on your understanding of the Phillips curve, is it possible for the unemployment rate to increase while inflation increases? Explain.
 
  What will be an ideal response?


emsimon14

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A

Answer to Question 2

This can occur when negative supply shocks occur. That is, we would observe this when factors cause the natural rate of unemployment to rise (e.g. during the 1970s). This would cause an increase in u and an increase in inflation.


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