Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and the monetary base in the context of the Three-Sector-Model?
a. The GDP Price Index rises and monetary base
falls.
b. The GDP Price Index and monetary base fall.
c. The GDP Price Index falls and monetary base rises.
d. The GDP Price Index and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
You might also like to view...
If green bikes and brown bikes are perfect substitutes, the corresponding indifference curves
A) are horizontal. B) intersect each other. C) are vertical. D) have constant slope.
The supply curve for a perfectly competitive industry is obtained by
A. making an empirical study of historical data. B. vertically summing the supply curves of firms in the industry. C. horizontally summing the average cost curves of firms in the industry. D. horizontally summing the supply curves of firms in the industry.
A successful advertising campaign would likely
a. increase price elasticity of demand by stressing the uniqueness of the product. b. reduce price elasticity of demand by stressing the uniqueness of the product. c. reduce price elasticity of demand by informing consumers of the availability of substitutes. d. not alter the demand curve. e. generally make the demand curve shift inward.
The M form organization says China's success is due to:
a. central planning b. state capitalism c. regional competition d. the Hukuo system e. none of the above