Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive).
b. The quantity of real loanable funds per time period falls, and current international transactions become more negative (or less positive).
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The quantity of real loanable funds per time period and current international transactions remain the same.
e. The quantity of real loanable funds per time period rises, and current international transactions become more positive (or less negative).
.E
You might also like to view...
If the MPC in an economy is 0.8, government could close a recessionary expenditure gap of $100 billion by cutting taxes by
A. $100 billion. B. $125 billion. C. $80 billion. D. $200 billion.
Dynamic tax analysis generally predicts
A) that the higher the tax rate is, the higher the tax revenue will continue to be into the future. B) that the higher tax rates lead to higher revenues only to a point at which revenues will begin to decrease due to a diminishing tax base. C) that lower tax rates will always and continuously lead to increased tax revenues. D) that lower tax rates are always going to lead to decreased tax revenues.
Which of the following will be considered a lagging indicator of the business cycle?
a. Money supply b. New building permits c. Unemployment duration d. Unemployment claims e. New plant and equipment orders
Cashews and asparagus are normal goods. When the price of asparagus falls, the substitution effect by itself causes
a. the consumer to feel richer, so the consumer buys more cashews. b. the consumer to feel richer, so the consumer buys less cashews. c. cashews to be relatively more expensive, so the consumer buys less cashews. d. cashews to be relatively less expensive, so the consumer buys more cashews.