Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility 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/investing in the context of the
Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/investing becomes more negative (or less positive).
b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/investing becomes more negative (or less positive).
c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/investing becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve international borrowing/investing remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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The debate over how the government should respond to deep economic downturns may be easier to overcome if we focus on infrastructure spending because:
A. we have resolve the debate over infrastructure spending before we do anything else. B. there's broad agreement that the government should increase infrastructure spending. C. insufficient infrastructure spending is the root cause of most economic downturns. D. there's broad agreement that the government should decrease infrastructure spending.
What are inventories? What usually happens to inventories at the beginning of a recession, and what usually happens to inventories at the beginning of an expansion?
What will be an ideal response?
Refer to Scenario 7.4 below to answer the question(s) that follow.SCENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return.Refer to Scenario 7.4. Your accounting profit last year was
A. $20,000. B. $40,000. C. $70,000. D. $90,000.
The short-run Phillips curve is the relation between inflation and unemployment that holds for a given natural rate of unemployment and a
A. given level of unemployment. B. given expected rate of inflation. C. given rate of inflation. D. given expected level of unemployment.