Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
b. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
c. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
d. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
Because a third of government outlays are linked directly to the CPI, as time passes, the CPI bias means that the government's outlays are
A) larger than needed to keep pace with the cost of living. B) larger than needed to keep pace with the cost of living if the CPI is falling from one year to the next, otherwise the outlays are smaller than needed to keep pace with the cost of living. C) exactly equal to the changes in the cost of living. D) smaller than needed to keep pace with the cost of living. E) smaller than needed to keep pace with the cost of living if the CPI is falling from one year to the next, otherwise the outlays are larger than needed to keep pace with the cost of living.
Refer to the Article Summary. How would the NFL know if it was operating on the elastic portion of the demand curve for Super Bowl tickets?
A) If they decreased ticket prices and the total revenue from ticket sales did not change. B) If they increased ticket prices and the total revenue from ticket sales decreased. C) If they increased ticket prices and the total revenue from ticket sales increased. D) If they increased ticket prices and the total revenue from ticket sales did not change.
When economic profits are zero for a firm, it means that:
A. no firms will enter or exit the industry. B. average revenue slightly above average total cost. C. average variable costs are minimized. D. accounting profits are also zero.
A set of ideas about the economy that have been organized in a logical framework is called
A. economic theory. B. data development. C. empirical analysis. D. a methodology.