An economy is operating with a positive output gap, and a trade surplus, and experiences a significant increase in demand for its exports. Other things remaining constant, the most likely consequence of this is:
Mrs Smith has a nominal income of US60,000 per year, taxed by 40%. Her wealth includes some equipment, which depreciates by US2,500 every year. Mrs Smith decides to spend 70% of her disposable income on consumption and to invest the rest on equipment. Her equipment's value will increase by:
