Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model?
a. The quantity of real
loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Based on the neoclassical theory of investment, which aspect of a booming economy helps to explain the procyclicality of investment?
A) Tax revenues are likely to be rising. B) The real interest rate is likely to be rising. C) Capital goods are becoming more expensive. D) Financing constraints are likely to be relaxed for many businesses.
If the quality of a good improves while its price remains the same, then the value of a dollar
a. rises and the cost of living increases.
b. rises and the cost of living decreases.
c. falls and the cost of living increases.
d. falls and the cost of living decreases.
With a human capital investment (such as the investment in going to college), the most important cost tends to be
A. the opportunity cost of not working. B. taxes. C. books and equipment. D. foregone leisure.