In a Two-Period SOE Model with Production, an Increase in Current

question 56

Multiple Choice

In a two-period SOE model with production, an increase in current domestic total factor productivity

• A) increases domestic output and increases the current account surplus.
• B) increases domestic output and decreases the current account surplus.
• C) decreases domestic output and increases the current account surplus.
• D) decreases domestic output and decreases the current account surplus.
• E) decreases domestic output and decreases the marginal product of capital.

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Definitions:

Short-run Supply Curve

A graphical representation showing the quantity of goods a firm is willing and able to supply at different prices in the short run, considering some inputs are fixed.

Cost Curves

Graphical representations used in economics to show the costs of producing a certain number of goods, underlining concepts like marginal cost and average cost.

Identical

Exactly the same, without any difference.

Long-run Equilibrium

A state in which all factors of production can be adjusted, allowing for the optimal allocation of resources in a market or economy over time.