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 low mobility 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. Real GDP falls, and nominal value of the domestic currency rises.
b. Real GDP falls, and nominal value of the domestic currency remains the same.
c. Real GDP rises, and nominal value of the domestic currency rises.
d. Real GDP falls, and nominal value of the domestic currency falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Which of the following government outlays would be classified as a transfer payment?
A) payments of veterans benefits under the GI bill B) interest on the federal debt C) subsidies to gold-mining firms D) all of these
Protectionist policies often seek to shield domestic producers and domestic workers from ________ competition.
a. foreign b. local c. domestic d. unfair
What is the difference between command-and-control policies and market-based policies toward externalities?
a. Command-and-control policies provide incentives for private decisionmakers to solve the problems on their own, whereas market-based policies regulate behavior directly. b. Command-and-control policies rely on taxes, whereas market-based policies rely on quotas. c. Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior. d. Command-and-control policies are efficient, whereas market-based policies are inefficient.
From 2001 to 2004, the U.S. government went from a budget surplus to a budget deficit. According to the open-economy macroeconomic model, this should have decreased
a. both the supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. b. neither the supply of loanable funds nor the supply of dollars in the market for foreign-currency exchange. c. the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange. d. the supply of dollars in the market for foreign-currency exchange, but not the supply of loanable funds.