Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending remains the same.
e. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
.E
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A unit tax has an advantage over an ad valorem tax in situations when _____
a. inflation is high b. it is easy to estimate the value of the good being taxed c. it is difficult to estimate the value of the good being taxed d. inflation is low
Over the 1980s and 1990s, countries with sound fiscal, monetary, and trade policies and strong rule of law combined with large amounts of aid:
A. grew at 1 percent, indicating the necessity of good policy in conjunction with aid. B. still failed to grow, indicating new methods for furthering development are needed. C. saw GDP shrink by 1 percent, indicating corruption and inefficient use of funds is rampant. D. None of these statements is true.
The demand curve for labor shows the ________ of labor employers wish to hire at any given salary or wage rate, under the ceteris paribus assumption.
a. quality b. frequency c. quantity d. type
Refer to the following graph to answer the question:
Suppose price rises from $90 to $110. Total revenue moves in the ________ (same, opposite) direction as the dominant effect. In this case, total revenue ________ (increases, decreases, stays the same) because the quantity effect is ________ (larger than, smaller than, the same as) the price effect.
A. opposite; increases; larger than B. same; increases; larger than C. same; decreases; smaller than D. opposite; decreases; smaller than E. same; decreases; larger than