Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises and nominal value
of the domestic currency falls.
b. Real GDP falls and nominal value of the domestic currency remains the same.
c. Real GDP rises and nominal value of the domestic currency remains the same.
d. Real GDP rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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It is true that inflation is a
A) continuous increase in the money supply. B) continuous fall in prices. C) decline in interest rates. D) continually rising price level.
In year 2008, 1334 million lbs of milk was produced and sold in U.S. This is
A) the decision of the U.S. department of agriculture. B) quantity determined by the interactions in the market. C) the maximum amount the producers could produce. D) what consumers needed.
If Good X has social demand that is less than market demand, then Good X must be a
A. Good suffering from the free-rider problem. B. Good with an external benefit. C. Good with an external cost. D. Public good.
Firms will invest in new equipment whenever:
A. the expected cost of the equipment is less than the expected benefit. B. the expected cost of the equipment exceeds the expected benefit. C. public saving is greater than private saving. D. the expected cost of the equipment is greater than the value of the marginal product of the equipment.