Assume that the central bank purchases government securities in the open market. 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 falls, and real GDP falls.
b. The quantity of real loanable funds per time period and real GDP remain the same.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The quantity of real loanable funds per time period rises, and real GDP remains the same.
e. The quantity of real loanable funds per time period rises, and real GDP rises.
.E
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When the price of Gatorade is $2 per bottle, the quantity demanded is 500 bottles per at the local grocer. When the price falls to $1 per bottle, the quantity demanded increases to 1000. Given this information, the demand for Gatorade is
A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic.
Suppose there are no firms, only the government and households. What would the total demand for funds curve look like in such a world?
a. Downward sloping b. Perfectly horizontal c. Upward sloping d. There would be no such curve e. Perfectly vertical
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The GDP Price Index remains the same and reserve-related (central bank) transactions become more positive (or less negative). b. The GDP Price Index falls and reserve-related (central bank) transactions remain the same. c. The GDP Price Index and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If there is a shortage in a free market, then
A) consumers will offer to pay a lower price for the good, and the price will fall toward the equilibrium level. B) consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level. C) suppliers will decrease their output to match demand. D) suppliers will accept any price below equilibrium.