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 highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the
Three-Sector-Model?
a. The GDP Price Index rises, and nominal value of the domestic currency falls.
b. The GDP Price Index falls, and nominal value of the domestic currency rises.
c. The GDP Price Index falls, and nominal value of the domestic currency falls.
d. There is not enough information to determine what happens to these two macroeconomic variables.
e. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
.C
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An understanding of the principles of public sector economics can help us create _____
a. innovative public policies b. a more effective government c. a protective government that better shields its citizens from risk d. new spending programs
By how much does the monetary base change when the government decides to increase government spending by 5% (assume flexible exchange rates)?
a. There is not enough information given to tell. b. The monetary base does not change at all. c. The monetary base falls by 5% d. The monetary base rises by 5%
Studies of NAFTA have concluded that increases in the variety of U.S. imports from Mexico are equivalent to about a ________ per year reduction in Mexican import prices.
a. 100.2% b. 10.2% c. 1.2% d. 0.2%
Pure or economic profit is:
A. the amount by which accounting profits exceed normal profits. B. determined by subtracting explicit costs from total revenue. C. the return required to retain entrepreneurial talent in some particular line of production. D. the return to any resource the supply of which is perfectly inelastic.