In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds
a. only if the asset is located at home.
b. only if the asset is located abroad.
c. whether the asset is located at home or abroad.
d. None of the above is correct.
c
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If the exchange rate between the U.S. dollar and the Indian rupee (rupees per dollar) is greater than the relative purchasing power between the two countries, which of the following would be true?
A) There are opportunities for profit by purchasing goods in India and then selling them in the United States. B) Purchasing power parity predicts that the value of the dollar will rise as traders take advantage of arbitrage opportunities. C) There are no arbitrage opportunities for which traders can take advantage. D) Purchasing power parity predicts that the dollar is undervalued as traders take advantage of arbitrage opportunities.
Members of the European Union (EU), rely heavily on this form of indirect taxes.
A. Value-added tax B. Excise tax C. Property tax D. Sales tax
An increase in price and an indeterminate change in quantity are consistent with a:
A. leftward shift in supply and a rightward shift in demand. B. rightward shift in supply and a leftward shift in demand. C. leftward shift in demand and no shift in supply. D. leftward shift in supply and no shift in demand.
If the economy may be likened to a biological organism, then the financial system may be thought of as the ________
A) brain B) stomach C) lungs D) feet