Use the following diagram to answer the next question.
Assume the economy is initially at the full employment level of real GDP. An increase in consumption will ________.
A. reduce the full employment level of real GDP
B. reduce the unemployment rate
C. reduce output in the economy
D. reduce the price level
Answer: B
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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and current international transactions balance in the context of the Three-Sector-Model? a. The GDP Price Index
falls and current international transactions balance becomes more positive (or less negative). b. The GDP Price Index and current international transactions balance remain the same. c. The GDP Price Index falls and current international transactions balance remains the same. d. Real GDP falls and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose a German bank purchases a U.S. Treasury bond. This transaction would be recorded in the:
A. capital account. B. current account. C. goods trade balance. D. unilateral transfers.
Which of the following would not be studied in macroeconomics?
A. How a sharp increase in gasoline prices is likely to affect SUV sales. B. The causes of the Great Depression. C. The growth rate of the US economy. D. The impact of government spending on the economy.
If, as an entrepreneur, I am earning accounting profits of $60,000 per year and the opportunity cost of my time is $50,000
A. I should close my business. B. I am earning economic losses of $10,000. C. I am earning economic profits of $110,000. D. I am earning economic profits of $10,000.