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 GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
b. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
c. The GDP Price Index and reserve-related (central bank) transactions remain the same.
d. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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One effect of market intervention is resource misallocation
a. True b. False Indicate whether the statement is true or false
Interest rates fall and investment falls. Which of the following could explain these changes?
a. The government goes from a surplus to a deficit. b. The government repeals an investment tax credit. c. The government replaces a consumption tax with an income tax. d. None of the above is correct.
A potential entrant knows that it faces a (inverse) residual demand curve given by P = 50 ? 4Q. While the entrant does not know the inverse market demand, it does know that the incumbent committed to producing 150 units. Using this information, which of the following equations best summarizes the inverse market demand curve?
A. P = 200 ? Q B. P = 200 ? 4Q C. P = 150 ? 4Q D. None of the statements are correct.
Answer the following statements true (T) or false (F)
1. There is unanimous agreement that economic growth is both desirable and sustainable. 2. In the growth debate, defenders of economic growth believe that it is the primary path to raising living standards. 3. In the growth debate, critics of economic growth say that it will deplete our finite economic resources. 4. In the growth debate, critics of economic growth define "making a better living" as identical to the good life