Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions balance in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium.
a. The real risk-free interest rate remains the same and current international transactions balance becomes more negative (or less positive).
b. The real risk-free interest rate falls and current international transactions balance becomes more positive (or less positive).
c. The real risk-free interest rate and current international transactions balance remain the same.
d. The real risk-free interest rate rises and current international transactions balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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Both presidents Kennedy and Reagan proposed significant cuts in income taxes. Opponents of these tax cut proposals argued that
A) it would be better to cut taxes on corporate profits. B) cutting state sales taxes, rather than federal income taxes, would result in greater economic efficiency. C) while the tax cuts would result in greater economic efficiency, there was too much opposition to the tax cuts in Congress. As it turned out, Congress ultimately approved both tax cut proposals. D) the tax cuts would benefit high-income taxpayers.
The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant
a. Calculate the marginal product of labor. b. At what point does diminishing returns set in? c. Calculate the average product of labor. d. Find the three stages of production.
Price floors, when applied to agricultural markets, have
a. promoted the interests of consumers b. reflected the government's desire for greater equality in the distribution of goods among consumers c. created the need to print ration coupons d. created excess supply, which meant that the government would have to buy the excess supply to keep the prices from falling below the price floor e. created excess demand, which meant that the government had to prevent the price floor from rising above the equilibrium price
The performance of the macroeconomy ultimately depends on the microeconomic decisions made by households and businesses
a. True b. False Indicate whether the statement is true or false