A Decrease in the Real Interest Rate in the U

question 84

Multiple Choice

A decrease in the real interest rate in the U.S.will cause net exports to:

• A)Increase because exports will remain constant but imports will decrease
• B)Decrease because exports will decrease and imports will increase
• C)Decrease because exports will increase but imports will increase
• D)Increase because exports will increase and imports will decrease

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Definitions:

Inelastic

Describes a situation where the demand for or supply of a good or service is relatively unresponsive to changes in price.

Elasticity of Supply

A measure of how much the quantity supplied of a good changes in response to a change in its price.

Productive Capacity

The maximum output a company or economy can produce with its current resources and technology, without causing inflation.

Labor Changes

Adjustments in the workforce, including alterations in the number of workers, the quality of labor, or employment conditions.