Assume that the central bank purchases government securities in the open market. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive).
b. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same.
c. The GDP Price Index and reserve-related (central bank) transactions remain the same.
d. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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Which of the following metaphors best expresses the scientific nature of economic theory?
A) like a wool sweater, economic theory warms the heart of the economist. B) like a pair of eyeglasses, economic theory allows one to more clearly see and discriminate among the countless facts he or she faces. C) like a gun, economic theory shoots holes through every other rival theory. D) like a bank, economic theory is concerned with only one thing: the accumulation of money.
All of the following are resources EXCEPT
A) doctors because they perform services. B) the land the Statue of Liberty sits on. C) the computer in the student computer lab. D) money.
Voluntary free trade results in:
a. population growth. b. inflation. c. higher living standards. d. income disparity. e. unemployment.
As Jamal's income rises, his demand for pizza does not change. It follows that, for Jamal, pizza is a(n)
A) normal good. B) inferior good. C) neutral good. D) substitute good. E) complementary good.