Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. The GDP Price Index rises, and nominal value of the domestic currency falls.
c. The GDP Price Index rises, and nominal value of the domestic currency rises.
d. The GDP Price Index falls, and nominal value of the domestic currency rises.
e. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
.C
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When the expected inflation rate changes, what happens to the short-run Phillips curve? To the long-run Phillips curve?
What will be an ideal response?
Gross investment equals net investment plus
A) capital. B) capital gains. C) depreciation. D) dividends paid to the owners of the company.
If children go to school and become productive members of society,
A) a negative externality is created by the schools. B) a positive externality is created by the schools. C) no externality is created by the schools. D) an externality is created that may be positive or negative.
When government tries to change social norms, they:
A. might run an extensive ad campaign. B. are trying to change people's opinions about their actions. C. try to get consumers to internalize the cost or benefit they cause by their market decision. D. All of these statements are true.