Suppose a Country Has No Trade with Other Countries and People

question 78

Multiple Choice

Suppose a country has no trade with other countries and people can borrow as much money as they want at the current interest rate.A decrease in the price level will generate

• A)an increase in quantity demanded because of the real-balance effect.
• B)an increase in quantity demanded because of the open-economy effect and the indirect effect.
• C)an increase in quantity demanded because the real-balance effect will be stronger than the indirect effect and the open-economy effect.
• D)an increase in quantity demanded because the indirect effect will be stronger than the real-balance effect.

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Definitions:

Congress

The legislative assembly in the United States, incorporating the Senate and the House of Representatives as its two divisions.

Downsizing

The process of reducing the size of a company by eliminating staff positions, often to improve efficiency or reduce costs.

Cash Crop

A crop produced primarily for sale rather than for the farmer's own use, often generating significant income for farmers and economies, examples include tobacco, cotton, and sugar cane.

General Stores

Local retail establishments that carry a wide variety of goods including food, clothing, and household items, particularly relevant in rural areas of the 19th and early 20th centuries.