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 real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
b. Real GDP falls, and net nonreserve-related international borrowing/lending falls.
c. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. There is not enough information to determine what happens to these two macroeconomic variables.
e. Real GDP and net nonreserve-related international borrowing/lending remain the same.
.B
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Refer to Table 2-5. Assume Nadia's Neckware only produces ascots and bowties. A combination of 8 ascots and 18 bowties would appear
A) along Nadia's production possibilities frontier. B) inside Nadia's production possibilities frontier. C) outside Nadia's production possibilities frontier. D) at the horizontal intercept of Nadia's production possibilities frontier.
Compared with other countries in the OECD, French government spending relative to GDP is
A) among the highest. B) about average. C) slightly below average. D) among the lowest.
If the federal government tries to make fiscal policy sustainable by decreasing expenditure on government capital goods, private capital goods will become ________ productive, and this will result in ________ potential GDP
A) more; lower B) more; higher C) less; lower D) less; higher
Gross domestic product includes all
a. legal and illegal final goods, but it excludes all legal and illegal final services. b. legal and illegal final goods and all legal and illegal final services. c. legal final goods and services, but it excludes illegal final goods and services. d. legal and illegal final goods and legal final services, but it excludes illegal final services.