In a Large Open Economy, the Real Interest Rate Does

question 2

Multiple Choice

In a large open economy, the real interest rate does not have to fall by as much in order to restore equilibrium in the goods market in response to an increase in domestic output because

• A)the IS curve is steeper.
• B)some of the increase in desired domestic saving flows abroad.
• C)the increase in desired domestic saving is smaller.
• D)foreigners will decrease their demand for domestically produced goods.

Analyze the strategic interactions between firms in a competitive industry through mathematical modeling.

Understand and apply the concept of utility functions in economic decision-making.

Calculate the maximum amount individuals are willing to pay for a good given their utility functions and budget constraints.

Demonstrate how to find Pareto optimal allocations of resources between public and private goods.

---

Definitions:

Posthypnotic Suggestion

involves instructions given to a person under hypnosis that are to be executed after the hypnosis session has ended, often used to change behaviors.

Mindfulness Meditation

A practice of maintaining a nonjudgmental state of heightened or complete awareness of one's thoughts, emotions, or experiences on a moment-to-moment basis.

Change Blindness

A failure to be aware of visual information when one’s attention is directed elsewhere.

Automatic Processing

Automatic processing involves unconscious, effortless mental operations that allow us to perform tasks without deliberate attention to detail.