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 GDP Price Index and current international transactionsin the context of the Three-Sector-Model?
a. The GDP Price Index rises, and current international transactionsbecomes more negative (or less positive).
b. The GDP Price Index and current international transactionsremain the same.
c. The GDP Price Index falls, and current international transactionsremains the same.
d. The GDP Price Index falls, and current international transactionsrises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?
A) The quantity of cameras produced will equal the quantity of cameras bought in the market. B) Sellers of cameras will have an incentive to charge a price higher than $40. C) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium. D) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras.
According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 . and the velocity of money equals one, then the price level will equal
a. $0.13 b. $1.25 c. $8 d. $200 e. $8,000
Which of the following might be a method that the government could use to correct a negative externality?
A. an effluent fee on waste from the production of goods that create negative externalities B. encouraging overallocation of resources of production of goods that create negative externalities C. government subsidies to producers of goods that create negative externalities D. financing additional production of goods that create negative externalities
Molly received an autographed poster of David Hasselhoff for her 21st birthday. Her friend Helga offered her $50 for the poster, but Molly refused to sell the poster even though she knows she would never pay that much to replace it if it was ever damaged
or destroyed. Explain this inconsistency in Molly's behavior. What will be an ideal response?