Author Question: Based on the Saving-Investment Diagram, if the domestic real interest rate is indicated by B, then ... (Read 69 times)

darbym82 · **on:** Jun 30, 2018

Based on the Saving-Investment Diagram, if the domestic real interest rate is indicated by B, then ________.

A) the value of net exports is zero
B) the diagram represents a closed economy
C) the world real interest rate is indicated by A
D) the difference between values F and E measures the net capital inflow
E) none of the above

Question 2

Which of the following is the most likely explanation for the behavior of private inventories between September 2007 and September 2009, as depicted in Figure 19.1?

A) a substantial decline in the desired level of inventories, due to a slump in aggregate demand
B) a substantial decline in the desired level of inventories, as improvements in technology have reduced the size of inventories needed to support both production and customer deliveries
C) an unanticipated draw-down of inventories as the economy was growing much faster than expected
D) a substantial decline in the desired level of inventories, as changes in the tax code increased the cost of holding inventories