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 GDP Price Index and reserves account in the context of the Three-Sector-Model?
a. The GDP Price Index falls and reserves account becomes more positive (or less negative)
b. The GDP Price Index falls and reserves account remains the same.
c. The GDP Price Index and reserves account remain the same.
d. The GDP Price Index rises and reserves account remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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If a graph shows a negative relationship between two variables which then becomes a positive relationship, this curve would
A) always be an upward-sloping line. B) have a minimum point. C) have a maximum point. D) always be a downward-sloping line.
Which of the following weights on utility (over four periods starting with the current one) provide an illustration of hyperbolic discounting that could well lead to inconsistent choices over time?
a. 1, .5, .25, .125. b. 1, .25, .0625, .015625. c. 1, .8, .72, .648. d. 1, 1, 1, 1.
Which of the following consumer choices is most likely made from non-selfish motives?
a. buying two cartons of diet Coke because you are addicted to the drink b. buying clothes on sale even though the manufacturer uses sweat shops c. buying a more expensive washing machine because it is environmentally friendly d. buying the cheapest cell phone because you cannot afford to pay more
Mutual interdependence means that a firm's
A. profits are affected by another firms' entry or exit. B. behavior is affected by other firms' actions. C. costs are affected by other firms' costs. D. revenues are affected by another firms' demand for its product.