To Extend the Short Run to Include a More Sophisticated

question 3

Multiple Choice

To extend the short run to include a more sophisticated version of the trade balance, we include:

• A) foreign income.
• B) the gap between domestic and foreign inflation rates.
• C) the changes in the money supply.
• D) the gap between the domestic and foreign real interest rates.
• E) differences in unemployment rates.

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Definitions:

Higher Costs

An increase in the expenses associated with production, operation, or acquisition in business or personal finances.

Worker Productivity

Worker productivity measures the output of goods and services produced per unit of labor input, often considered over a specific period of time.

Capital Required

The total amount of financial resources needed to fund a business’s operations and investments, including starting costs, assets, and working capital.

Natural Resources

Materials or substances occurring in nature which can be exploited for economic gain, including water, minerals, forests, and fossil fuels.