In an open economy, a reduction in government spending will cause
A) an increase in domestic output.
B) an increase in imports.
C) an increase in net exports.
D) all of the above
E) none of the above
Question 2
Suppose individuals wish to obtain the most accurate comparison of living standards between the Canada and Saudi Arabia. To do so, one would convert Saudi Arabian output into dollars using
A) the current nominal exchange rate.
B) the current real exchange rate.
C) the prior year's real exchange rate.
D) an average of the last five years' exchange rates.
E) purchasing power parity methods.
Cheetah at the Werribee Open Range Zoo
OPEN GLOVING 2
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