Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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 real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and real GDP falls.
b. The quantity of real loanable funds per time period rises, and real GDP rises.
c. The quantity of real loanable funds per time period rises, and real GDP remains the same.
d. The quantity of real loanable funds per time period and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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When the economy slows down the:
A. demand for workers increases. B. supply of workers increases. C. demand for workers decreases. D. supply of workers decreases.
Firms often seek to borrow money to expand their capital stock, and the price they pay for the money is the interest rate. What happens to supply of money if the interest rate increases?
a. It increases. b. It decreases. c. It does not change. d. Uncertain-economic theory has no answer to this question.
Taylor has the following assets and liabilities:Two cars$15,000House$400,000Mortgage$300,000Cash$1,000Car loans$5,000Checking account balance$3,000Credit card balance$3,000 What is the value of Taylor's assets?
A. $422,000 B. $416,000 C. $308,000 D. $419,000
Lilliput imports rope from Brobdingnag, where rope producers are subsidized by the government because of their great political clout. The most efficient policy from the standpoint of Lilliput is to
a. continue trading at the subsidized price. b. stop trading with Brobdingnag. c. place a tariff on rope imports to offset the subsidy. d. give a similar subsidy to the rope producers of Lilliput.