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 real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
c. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. Real GDP falls, and net nonreserve-related international borrowing/lending does not change.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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If a natural monopoly has an average cost pricing rule imposed, the rule will
A) maximize total surplus in the regulated industry. B) generate an economic loss for the regulated firm. C) reduce the consumer surplus and generate a deadweight loss when compared to a marginal cost pricing rule. D) set price below marginal cost.
In an open economy, which of the following will cause a reduction in the size of the multiplier?
A) an increase in the marginal propensity to import B) an increase on foreign output C) a reduction in the marginal propensity to save D) all of the above E) none of the above
Other things being constant, if the marginal propensity to save (MPS) is 0.2, and private investment spending falls by $100 million, then real Gross Domestic Product (GDP)
A. increases by $80 million. B. decreases by $50 million. C. decreases by $500 million. D. increases by $1 billion.
Refer to the information provided in Table 14.4 below to answer the question that follows. Table 14.4B's Strategy ?Raise PriceDon't Raise Price?RaiseA's profit $6,000A's profit $20,000?PriceB's profit $6,000B's profit $30,000A's Strategy????Don'tA's profit $30,000A's profit $10,000?RaiseB's profit $20,000B's profit $10,000Refer to Table 14.4. Firm A?s optimal strategy is
A. dependent on what Firm B does. B. to raise the price of its product. C. to not raise the price of its product. D. indeterminate from this information, as no information is provided on Firm A?s risk preference.