Which of the following pairs of variables is likely to be positively correlated?
A) Income and consumption
B) Education and unemployment
C) Price and consumption
D) Availability of health care and death rate
Ans: A) Income and consumption
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A decreased government deficit created by a lump-sum tax increase will increase national saving if
A) the value of government bonds outstanding grows slower than the public's wealth. B) it causes consumption to fall. C) the government runs a primary surplus as a result. D) the real interest rate is less than the growth rate of real GNP.
As part of the "exchange rate channel of monetary policy," a higher money supply causes a __________ interest rate and thus __________ of the domestic currency
A) higher; appreciation B) higher; depreciation C) lower; appreciation D) lower; depreciation
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. 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 net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model? a. The real risk-free interest rate falls
and net nonreserve international borrowing/lending balance becomes more positive (or less negative). b. The real risk-free interest rate falls and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The real risk-free interest rate rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). d. The real risk-free interest rate and net nonreserve international borrowing/lending balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose Larry's Lariats produces lassos in a factory, and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. If Larry were to decrease the production of lassos, which of the following is true regarding the company's costs?
A. The fixed cost of the rope cutting machine would stay the same. B. The variable costs of rope would drop to zero. C. The fixed cost of the employee's wages would stay the same. D. None of these is true.