Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The GDP Price Index rises and monetary base rises.
b. The GDP Price Index rises and monetary base falls.
c. The GDP Price Index and monetary base fall.
d. The GDP Price Index and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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The number of vehicle types available in the United States has increased dramatically over the past thirty years. Everything else equal, this would make
A) the demand for individual vehicle types to become less elastic. B) the demand for individual vehicle types to become more elastic. C) the demand for all vehicle types to become unitary elastic. D) the demand for low quality vehicle types to become less elastic.
Which of the following statements best describes the difference between economic regulation and social regulation?
a. Economic regulation has little to do with price and output while social regulation explicitly deals with price and output. b. Social regulation is concerned with direct redistribution of wealth while economic regulation is concerned with accumulation of wealth. c. Economic regulation is concerned with direct redistribution of wealth while social regulation is concerned with accumulation of wealth. d. Social regulation has historically targeted industries such as railroads and airlines while economic regulation has all the industries under its purview. e. Economic regulation deals with price and output , while social regulation deals with health and safety matters that apply across several industries.
Assume that the farmers know that their revenues would increase if each would take a certain amount of acreage out of production. An agreement to do so
A) would not be made because the farmers have no incentive to enter into it. B) would not be made because it would contradict the assumption that farmers are profit maximizers. C) probably would not be adhered to, if made, because it would be disadvantageous for the farmers as a group. D) probably would not last, if made, because each farmer would have an incentive to break it.
If the Fed believes the inflation rate is about to increase, it should
A. Use a Contractionary fiscal policy to increase the interest rate and shift AD to left B. Use an expansionary monetary policy to lower the interest rate and shift AD to the right C. Use a contractionary monetary policy to increase the interest rate and shift AD to the left