Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index and current international transactions remain the same.
b. The GDP Price Index falls, and current international transactions become more negative (or less positive).
c. The GDP Price Index rises, and current international transactions becomes more negative (or less positive).
d. The GDP Price Index rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find
A) that the demand for Windows is inelastic. B) that the demand for Windows is elastic. C) a large positive value for the cross elasticity of Windows and other software. D) a negative income elasticity for Windows. E) a positive income elasticity for Windows.
A steel factory has the right to discharge waste into a river. The waste reduces the number of fish, causing damage for fisheries. Let X denotes the quantity of waste dumped. The marginal damage, denoted MD, is given by the equation MD = 2 + 5Q. The marginal benefit (MB) of dumping waste is given by the equation MB = 34 - 3Q.
(a) Calculate the efficient quantity of waste. (b) What is the efficient fee, in dollars per unit of waste, which would cause the firm to dump only an efficient quantity of waste? (c) What would be the quantity dumped if the firm did not care about the fishery?
Use the following general linear demand relation:Qd = 680 - 9P + 0.006M - 4PRwhere M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P , then, when the price of the good is $60,
A. there is equilibrium in the market. B. there is a shortage of 60 units of the good. C. there is a surplus of 60 units of the good. D. the quantities demanded and supplied are indeterminate.
In the market for loanable funds, the seller is considered to be
A) the lender. B) the borrower. C) the lender or the borrower depending upon the use to which the funds are put. D) the lender or the borrower depending upon whether interest rates are rising or falling.