Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
Which of the following provides the best evidence of the specialization of labor?
a. ?A firm that produces a line of related products, such as eight kinds of breakfast cereal b. ?An architect who is willing to practice in only one geographic area c. ?A physician who practices in a specialty area such as cardiology or orthopedic surgery d. ?A family that eats at Wendy's every Thursday night e. ?A retailer who sells goods but provides no services
Assume the supply curve for diapers is a typical, upward-sloping straight line, and the demand curve for diapers is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax. Then a tax of $0.50 per diaper is imposed. The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received
by sellers falls from $1.50 to $1.40 . The government's tax revenue amounts to $475 per month. Which of the following statements is correct? a. After the tax is imposed, the equilibrium quantity of diapers is 900 per month. b. The demand for diapers is more elastic than the supply of diapers. c. The deadweight loss of the tax is $12.50. d. The tax causes a decrease in consumer surplus of $380.
One of the main reasons that people want to limit imports is the
A. fear that imports will decrease the income of Americans. B. idea that cheap foreign labor destroys American jobs. C. concept that if trade benefits another country, it must harm the United States. D. All of the above are correct.
Which of the following is the best example of an oligopolistic industry?
A. convenience stores B. smartphone manufacturing C. public utilities D. book publishing