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 real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more negative (or less positive).
b. Real GDP and current international transactions remain the same.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. Real GDP falls, and current international transactions become more negative (or less positive).
e. Real GDP rises, and current international transactions remain the same.
.A
You might also like to view...
Stage III of the short-run Production Function is
A) the most efficient mix of inputs. B) the least costly level of output. C) where additional units of variable inputs will lead to less output. D) where additional units of variable inputs will lead to more output.
Ceteris paribus, an increase in the supply of a good causes which of the following?
a. lowers the equilibrium price, and reduces the quantity bought and sold b. raises the equilibrium price, and raises the quantity bought and sold c. raises the equilibrium price, and increases the quantity bought and sold d. lowers the equilibrium price, and increases the quantity bought and sold e. equilibrium price and equilibrium quantity change are indeterminate
One In The News article is titled "The Misery Index." If the inflation rate is 5 percent and the unemployment rate is 7 percent, the misery index is
A. 12 percent. B. 35 percent. C. 1.4 percent. D. 2 percent.
Steve uses $300 from his paycheck to pay off his credit card balance. Based on this information:
A. Steve's saving has decreased by $300. B. Steve's saving has increased by $300. C. Steve has a capital loss of $300. D. Steve's wealth is unchanged.