Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and current international transactions become more negative (or less positive).
b. Real GDP rises, and current international transactions become more negative (or less positive).
c. Real GDP and current international transactions remain the same.
d. Real GDP rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Refer to Figure 24-1. Ceteris paribus, a decrease in the growth rate of domestic GDP relative to the growth rate of foreign GDP would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
For economists, historical episodes
a. are not worthy of study because they offer few insights into current economic events and problems. b. are not worthy of study because laboratory experiments provide more reliable data. c. are worthy of study because economists rely entirely on observation, rather than on theory. d. are worthy of study because they serve as valuable substitutes for laboratory experiments.
The following depicts a normal-form game of price competition.Firm AFirm B??Low PriceHigh Price?Low Price0,025,-5?High Price-5,2510,10What is the maximum interest rate that can sustain collusion?
A. 33 percent B. 25 percent C. 66.7 percent D. 15 percent
Price discrimination is:
A. always legal. B. always illegal. C. only illegal if it hurts consumers more than nondiscrimination. D. only illegal if used to lessen or eliminate competition.