Economics - Economics Section 2
11. Imports most likely respond to:
- Option : C
- Explanation : Imports reflect the domestic needs for foreign goods, which vary together with domestic economic growth.
12. Exports most likely respond to:
- Option : B
- Explanation : Exports reflect the foreign demands on domestic output, which depend on the conditions of global economy.
13. The real business cycle (RBC) model most likely suggests that:
- Option : B
- Explanation : As suggested by the earliest RBC models, a person is unemployed because he or she is asking for wages that are too high
14. Which of the following is the main difference between New Classical and NeoKeynesian models?
- A
New Classical models are monetarist, whereas Neo-Keynesian models are not.
- B
New Classical models use utility-maximizing agents, whereas NeoKeynesian does not.
- C
New Classical models assume that prices adjust quickly to changes in supply and demand, whereas Neo-Keynesians assume that prices adjust slowly.
- Option : C
- Explanation : A key feature of Keynesian macroeconomics is the stickiness of prices. In contrast, Classical views assume flexible price adjustments that ensure market clearing.
- Option : A
- Explanation : The Austrian economic school attributes the primary cause of business cycle to misguided government intervention.
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