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 GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and GDP Price Index falls.
b. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The quantity of real loanable funds per time period rises, and GDP Price Index rises.
e. The quantity of real loanable funds per time period and GDP Price Index remain the same.
.D
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Because prices are slow to move in the short-run, when the Federal Reserve lowers the federal funds rate
A) nominal interest rates rise. B) real interest rates fall. C) inflation falls. D) real interest rates rise.
Referring to the graph above, assume that, at first, the labor market is in equilibrium at point 4. In which scenario does unemployment rise, with no change in the quantity of employment?
A) real wage rises to the level of points 1 and 2 B) supply shifts to pass through point 5, with no change in the real wage C) demand shifts to pass through point 3, with no change in the real wage D) supply shifts to pass through point 3, with no change in the real wage
A perfectly competitive firm's supply curve is the portion of the:
a. TC curve that lies above the TR curve. b. MR curve that lies above the MC curve. c. AFC curve that lies above the AR curve. d. AVC curve that lies above the ATC curve. e. MC curve that lies above the AVC curve.
Which of the following describes a surplus-enhancing transaction?
A. A firm lays off 25 workers in order to cut costs. B. Your state government imposes a higher minimum wage than the one set by federal law. C. A person pays $10.00 to buy a scoop of ice cream at a baseball game. D. The Federal government taxes the wealthy to pay for programs to help the poor.