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 quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending remain the same.
e. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
.E
You might also like to view...
Suppose that Sweden imposes a retail disposal charge on household batteries. To assure that allocative efficiency is achieved, this charge should be set equal to
Use the following forany or all of Questions 11 through 13 below. Consider the following model of the municipal solid waste (MSW) services market in the city of Houston. MSC = 1.5 + 1.25Q MSB = 30 – 2.5Q MEC= 0.75Q MEB= 0 whereQ is the number of trash containers serviced per household per month. a. the vertical distance between MSB and MPB at QC b. the marginal social benefit at QE c. the MPC associated with battery production d. the ?MEB at the efficient equilibrium
The federal funds rate is the interest rate:
a. U.S. financial institutions pay to their best (i.e., largest) depositors. b. U.S. financial institutions charge their best customers. c. On U.S. interbank loans. d. The Federal Reserve changes banks that borrow from it. e. The World Bank charges to central banks.
In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated decrease in the money supply will be
What will be an ideal response?
Suppose that a major natural disaster destroys a large part of a country's capital stock but miraculously does not cause anybody bodily harm. What will happen to the real wage rate?
A. It will not change. B. It will rise. C. It will fall. D. It could rise or fall.