Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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 real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and real GDP rises.
b. The quantity of real loanable funds per time period rises, and real GDP remains the same.
c. The quantity of real loanable funds per time period and real GDP remain the same.
d. The quantity of real loanable funds per time period rises, and real GDP falls.
e. The quantity of real loanable funds per time period falls, and real GDP falls.
.A
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The economist who developed the checkerboard model of neighborhood segregation was
A) Milton Friedman. B) Thomas Schelling. C) John Nash. D) David Ricardo.
Gains from trade are measured by: a. consumer surplus
b. producer surplus. c. the sum of consumer and producer surplus. d. producer surplus minus consumer surplus.
If demand is very inelastic,
A. The demand curve will be very steep. B. The demand curve will be horizontal. C. The demand curve is upward-sloping. D. The demand curve will be very flat.
Suppose the current account of a country is initially in balance. A new transaction occurs so that the current account is now in surplus. Official reserve balance is maintained before and after the transaction occurs. From this, we know that
A. the government must make official reserve transactions. B. the financial account is now in deficit. C. the balance of goods and services is now in surplus. D. the balance of trade is now in surplus.