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 low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the
Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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The relationship between consumer spending and disposable income is called the
A. conjunction function. B. consumption function. C. aggregate demand function. D. marginal spending function.
The random walk theory implies that stock prices
a. go down, then up, and then down again. b. go up and then down in a predictable pattern. c. follow systematic trends. d. are unpredictable based on past trends.
Using the above figure, the efficient amount of paper produced is
A) 60 million tons. B) 80 million tons. C) 100 million tons. D) 120 million tons.
In most of the financial crises of the last decade, there were large and sudden financial outflows as both home and foreign investors tried to avoid the expected crises
Indicate whether the statement is true or false