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 real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency falls.
b. Real GDP falls, and nominal value of the domestic currency rises.
c. Real GDP rises, and nominal value of the domestic currency remains the same.
d. Real GDP rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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According to the data on real U.S. GDP,
A. economic growth has been irregular, with some periods of downturns. B. economic growth has been consistent, but with a few downturns. C. economic growth has been extremely rapid, but also includes major collapses. D. economic growth has been slight, but downturns have also been eliminated.
Refer to Figure 7-3. If there was no quota, how many pounds of peanuts would be imported?
A) 16 million B) 28 million C) 30 million D) 40 million
If you look at the financial page listings for futures contracts and find that futures prices on Treasury bonds are falling over a particular time period, futures market investors must expect that
A) Treasury bond prices will be higher in the future. B) Treasury bond yields will be higher in the future. C) Treasury bond yields will be lower in the future. D) futures prices will rise again at the end of the period.
During the U.S. Great Moderation, ________
A) the volatility in the inflation rate declined by 50% B) the volatility in the rate of growth of real output declined by 33% C) the economy stabilized from the higher uncertainty of the 1970s D) all of the above E) none of the above