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 current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions become more positive (or less negative).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive).
d. The quantity of real loanable funds per time period rises, and current international transactions remain the same.
e. The quantity of real loanable funds per time period and current international transactions remain the same.
.A
You might also like to view...
The assumption that current-period labor supply is positively related to the current-period real wage is justified as long as the
A) income effect dominates the substitution effect in the short run. B) income effect dominates the substitution effect in the long run. C) substitution effect dominates the income effect in the short run. D) substitution effect dominates the income effect in the long run.
Unanticipated inflation is less of a problem than anticipated inflation
Indicate whether the statement is true or false
Briefly and concisely define the following terms. a. Voluntarism b. Direct controls c. Depletable resource
What will be an ideal response?
A Lorenz curve that becomes less bowed out implies:
A. no change in income distribution. B. a change in income distribution toward more equality. C. an increase in poverty. D. a change in income distribution toward more inequality.