Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
b. The GDP Price Index and reserve-related (central bank) transactions remain the same.
c. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
d. There is not enough information to determine what happens to these two macroeconomic variables.
e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.
.E
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If net exports increase by 100 and the mpc is 0.75, equilibrium aggregate output increases by
A) 100. B) 250. C) 400. D) 750.
Coase bargaining works best in a situation with a large number of affected parties and the transactions costs of bargaining are relatively low.
Answer the following statement true (T) or false (F)
If a manager's expected marginal revenue exceeds their expected marginal cost, which of the following is true?
A) The expected profit from producing another unit is negative. B) The manager is maximizing expected profit. C) To maximize expected profit, the manager should decrease production. D) To maximize expected profit, the manager should increase production.
Refer to the above figure. As more and more firms are able to and actually do enter the industry, the demand curve of each firm and its marginal revenue curve
A) will shift inward until the demand curve is tangent to the average total cost curve. B) will become vertical. C) will become upward sloping. D) None of the above will occur.