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 GDP and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. Real GDP rises, and reserve-related (central bank) transactions become more positive (or less negative).
c. Real GDP and reserve-related (central bank) transactions remain the same.
d. Real GDP rises, and reserve-related (central bank) transactions remain the same.
e. Real GDP falls, and reserve-related (central bank) transactions become more negative (or less positive).
.E
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Which of the following would be classified as a consumer nondurable?
a. New clothing b. A new central heating system c. A new car d. A new bedroom suite e. A new riding mower
The nominal interest rate is 4%, the inflation rate is 1% and the tax rate is 20%. Given U.S. tax laws, how is after-tax real return computed?
a. .03(1-.20) b. .04(1 -.20) c. .04(1 - .20) - .01 d. None of the above is correct.
What happens in the money market when there is an increase in the supply of money?
A) The equilibrium quantity of money increases and the equilibrium interest rate increases. B) The equilibrium quantity of money increases and the equilibrium interest rate decreases. C) The equilibrium quantity of money decreases and the equilibrium interest rate increases. D) The equilibrium quantity of money decreases and the equilibrium interest rate decreases.
Refer to the above figure. If the market price is equal to A, which statement can be made about economic profits?
A. Economic profits are positive and equal to ABEF.
B. Economic profits are negative and equal to ABQ
0.
C. Economic profits are negative and equal to GCEF.
D. Economic profits are positive and equal to ABCG.