As real rates of interest increase in the economy, real investment spending increases
Indicate whether the statement is true or false
FALSE
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Use the following graph for a private closed economy (an economy with only a private sector and no international trade) to answer the next question.
The equilibrium level of real GDP in this economy is
A. $250 billion. B. $350 billion. C. $450 billion. D. $150 billion.
If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks' total reserves?
A) $2,000 B) $20,000 C) $8,000 D) $100,000 E) $10,000
The expected effects of a tighter monetary policy are
A. lower real interest rates. B. exchange rate depreciation. C. lower inflation. D. All of these responses are correct.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and GDP Price Index in the context of the Three-Sector-Model? a. The quantity of real loanable funds per time period rises and
GDP Price Index rises. b. The quantity of real loanable funds per time period falls and GDP Price Index falls. c. The quantity of real loanable funds per time period rises and GDP Price Index falls. d. The quantity of real loanable funds per time period and GDP Price Index remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.