Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the net nonreserve international borrowing/lending balance and monetary base in the context of the Three-Sector-Model?
a. The net nonreserve international
borrowing/lending balance becomes more positive (or less negative) and monetary base rises.
b. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base falls.
c. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base falls.
d. The net nonreserve international borrowing/lending balance and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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If all of the returns to a resource are in the form of economic rent,
a. the demand curve for that resource must be horizontal b. the demand curve for that resource must be vertical c. the supply curve of that resource must be horizontal d. the supply curve of that resource must be vertical e. the demand curve for that resource must be perfectly elastic
Suppose a U.S. automaker builds and operates a new factory in Italy. Future production from such an investment will
a. increase Italian GDP more than it increases Italian GNP. b. increase Italian GNP more than it increases Italian GDP. c. have no affect on Italian GNP, but will increase Italian GDP. d. have no affect on either Italian GDP or GNP.
Stuart tells his student government representative at his college to propose rent controls on local rental housing as a way to help students afford rental housing. Maria disagrees with Stuart, saying rent controls will make students worse off. Who is correct and why?Economic theory suggests that this policy would harm students as a whole despite the fact that some students who are able to find housing at the reduced price would benefit. Which of the following are some of the offsetting secondary effects of the rent controls that would work to the disadvantage of students?
A. Stuart is correct. All students will be better off with a lower price of rental housing. B. Maria is correct. All students will be worse off with a shortage of rental housing. C. Neither are correct. Imposing rent controls will have no effect on the rental housing market. D. Both are correct in part. Rent controls will be better for the students who are able to find housing at the reduced price but worse for students as a whole because there will be a shortage of rental housing, a lower future supply, and the quality will deteriorate.
The difference between the value of a product enjoyed by consumers and the total variable costs incurred by producers in a competitive market for that product is
A. producer surplus. B. consumer surplus. C. the difference between consumer surplus and producer surplus. D. the sum of consumer surplus and producer surplus.