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 the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and nominal
value of the domestic currency falls.
b. The real risk-free interest rate falls and nominal value of the domestic currency remains the same.
c. The real risk-free interest rate rises and nominal value of the domestic currency remains the same.
d. The real risk-free interest rate rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Refer to the scenario above. Which of the following problems is likely to occur in this market?
A) The fallacy of composition B) Moral hazard C) Adverse selection D) The free-rider problem
Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. If the price of cashews falls from $4 to $2, the market quantity demanded would
A) increase by 28 lbs. B) decrease by 36 lbs. C) decrease by 28 lbs. D) increase by 36 lbs.
If a nonrenewable resource is used more in the current period, the return on saving the resource for future falls
a. True b. False Indicate whether the statement is true or false
If the income elasticity of demand for a Snickers bar is 0.59, then we know that within the relevant price range for Snickers bars, it is
a. price elastic b. price inelastic c. income inelastic d. income elastic e. according to the economist's definition of inferior, an inferior good