A decline in real income
a. can occur only if there is a decline in nominal income
b. can occur only if there is an increase in the price level
c. can occur only if there is either a decline in nominal income or an increase in the price level
d. cannot occur if there is either an increase in nominal wages or a decline in the price level
e. can occur only if there is a decline in the price level
C
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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 real GDP and current international transactions balance in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and current international transactions balance becomes more negative (or less positive). b. Real GDP rises and current international transactions balance becomes more negative (or less positive). c. Real GDP and current international transactions balance remain the same. d. Real GDP rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following statements about money is not true?
A. There is an opportunity cost of holding money. B. Present dollars are worth more than future dollars. C. Income-earning investment opportunities exist. D. When interest rates are positive, future dollars are more valuable than present dollars.
Fiscal policy may be used to slow an expansion in order to fight ______.
a. inflation b. deflation c. unemployment d. stagnation
(Consider This) Suppose that a large tree on Betty's property is blocking Chuck's view of the lake below. Betty accepts Chuck's offer to pay Betty $100 for the right to cut down the tree. This situation describes:
A. the Coase theorem. B. the optimal allocation of a public good. C. nonrivalry and nonexcludability. D. a market for externality rights.