Assume the FE curve is flatter than the LM curve. A negative external capital-flow shock shifts the FE curve left. Under zero sterilization, which one of the following will happen next?
A. Because of the incipient balance of payments surplus, the LM curve will shift rightward.
B. Because of the incipient balance of payments deficit, the LM curve will shift leftward.
C. Because of the incipient balance of payments deficit, the IS curve will shift rightward.
D. Because of the incipient balance of payments surplus, the IS curve will shift leftward.
Answer: B
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In the classical model
A) a decrease in aggregate demand will lead to a decrease in the price level and a decrease in real GDP. B) changes in aggregate supply leave real GDP unchanged. C) a decrease in aggregate demand will lead to an increase in the price level and a decrease in real GDP. D) changes in aggregate demand affect only the price level, not real GDP.
Which of the following characteristics is NOT likely to increase the interest on a loan?
A) a high-risk proposal B) a non-creditworthy borrower C) a short-term loan D) a larger dollar loan
Common ownership of resources:
a. is a system by which the government allocates the rights to harvest renewable resources. b. may fail to ensure that harvesting of renewable resources does not exceed the maximum sustainable yield. c. is an environmentally effective method of internalizing an externality problem in renewable resource conservation. d. efficiently controls the harvest of renewable resources. e. usually helps in preventing market failures.