Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and real GDP rises.
b. The real risk-free interest rate falls, and real GDP rises.
c. The real risk-free interest rate rises, and real GDP remains the same.
d. The real risk-free interest rate and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Over the past decade, the demand for goods produced in China has brought a sustained increase in demand for China's exports that has out-stripped the growth of supply. As a result, China has experienced a _______
A. period of stable prices and sustained economic growth B. rising price level and demand-pull inflation C. rising price level and cost-push inflation D. rising price level and a falling real wage rate
Suppose a farmer in a perfectly competitive agricultural industry rents land that is uniquely productive in the production of a certain crop. In the long run
A) the owner of the land receives economic rent while the farmer earns zero economic profit. B) the owner of the land earns zero economic profit while the farmer receives economic rent. C) both the farmer and the owner of the land receive economic rent. D) neither the farmer nor the owner of the land receive economic rent.
When MFC = MRP, a firm in a competitive market will
A) stop hiring. B) hire more workers. C) earn additional profits. D) layoff workers.
During 2001-2011, what happened to the federal budget deficit?
What will be an ideal response?