Author Question: International trade forces countries to consume a combination of goods that is inside their ... (Read 46 times)

P68T · **on:** Jun 30, 2018

International trade forces countries to consume a combination of goods that is inside their production possibilities curve.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Describe the relationship between investment and the level of disposable income.

zoeyesther · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

False

Answer to Question 2

Investment is autonomous with respect to disposable income. That is, the level of disposable income does not determine investment, but the level of the interest rate does. A decrease in the interest rate increases autonomous investment and an increase in the interest rate decreases autonomous investment.