Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period and real GDP remain the same.
b. The quantity of real loanable funds per time period rises, and real GDP remains the same.
c. The quantity of real loanable funds per time period falls, and real GDP falls.
d. The quantity of real loanable funds per time period falls, and real GDP rises.
e. The quantity of real loanable funds per time period rises, and real GDP falls.
.C
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The government expenditure multiplier and the tax multiplier are
A) different in size and the tax multiplier is larger. B) not comparable because the government expenditure multiplier applies to aggregate supply and the tax multiplier applies to aggregate demand. C) different in size and the government expenditure multiplier is larger. D) identical in size. E) not comparable because the government expenditure multiplier applies to aggregate demand and the tax multiplier applies to aggregate supply.
Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances
a. True b. False Indicate whether the statement is true or false
Labor union membership, as a percent of workers, has steadily declined since the 1930s.
Answer the following statement true (T) or false (F)
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, the law of increasing opportunity costs applies to
A. Both brushes and combs. B. Brushes but not combs. C. Combs but not brushes. D. Neither brushes nor combs.