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 low mobility 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 falls, and real GDP falls.
b. The quantity of real loanable funds per time period falls, and real GDP rises.
c. The quantity of real loanable funds per time period rises, and real GDP remains the same.
d. The quantity of real loanable funds per time period and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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After long hair for men became popular, barbers found that their incomes fell. In an attempt to boost their incomes, many barbers raised the price of a haircut and yet their total revenue fell even more. What can explain this result?
A) The demand for haircuts by barbers is elastic because of many substitutes. B) The demand for haircuts by barbers became inelastic after the increase in price. C) Haircuts are inferior products. D) The demand for haircuts by barbers is inelastic because most people need haircuts. E) None of the above can explain the phenomenon.
The figure above shows the production possibilities frontiers for the United Kingdom and France. What is the opportunity cost of one bushel of wheat for the United Kingdom?
A) 1/4 of a pound of fish B) 1/2 of a pound of fish C) 1 pound of fish D) 200 pounds of fish E) 2 pounds of fish
What is Y - S equal to?
A) I B) C - T C) I + G D) C
Because a type of fish is on the verge of extinction, the government imposes rules that prohibit fishing in the publicly spawned grounds. At first, owners of fishing boats complain about this restriction on where they can fish, but soon they notice that the number of adult fish swimming outside the protected area is much higher than it was before. With the restriction, each fishing boat ends up catching more fish than it did before the restriction was in place. Which of the following principles of economic interaction best describes this scenario?
A) Markets usually lead to efficiency.
B)There is a trade-off between equity and efficiency.
C) When markets do not achieve efficiency, government intervention can improve welfare.
D) Markets move toward equilibrium.