Assume that the central bank purchases government securities in the open market. 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 reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same.
c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same.
d. The quantity of real loanable funds per time period 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.
.D
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The union representing the bread makers at the Hostess Bread Company went on strike and demanded higher wages than what the firm wanted to pay
I. If the firm is in a competitive labor market the union can only raise wages by decreasing employment. II. If the firm is a monopsony in the labor market the union can only raise wages by decreasing employment. III. If the firm is a monopsony in the labor market the union can both raise wages and increase employment. A) I only B) II only C) I and II D) I and III
Which of the following statements is FALSE?
A) When the relative price of a good falls, the substitution effect always leads the consumer to substitute more of that good for the other good. B) For a normal good, the income effect reinforces the substitution effect. C) For an inferior good, the income effect offsets the substitution effect. D) For an inferior good, the income effect is positive.
Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:
a. equal to that in a competitive labor market. b. less than that in a competitive labor market. c. greater than that in a competitive labor market. d. there is insufficient information for a conclusion.
A contractionary fiscal policy
I. decreases a government budget deficit or increases a government budget surplus. II. includes tax cuts. III. may include discretionary cuts in transfer payments. A) I, II, and III B) I and II only C) I and III only D) II and III only