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 quantity of real loanable funds per time period and monetary base in the context of the Three-Sector-Model?
a. The quantity of real loanable funds rises and monetary base rises.
b. The quantity of real loanable funds rises and monetary base falls.
c. The quantity of real loanable funds and monetary base fall.
d. The quantity of real loanable funds 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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Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher B. higher; potential C. lower; higher D. lower; potential
Sammy has a drone that he values at $1,500. Dean values the same drone at $2,000. Sammy decides to sell the drone to Dean for $1,800. If the government imposes a $350 tax on the sale of drones,
A) Sammy and Dean would not be able to complete the transaction. B) Sammy and Dean would still be able to complete the transaction. C) the tax would cause a deadweight loss of $500. D) Both A and C are correct.
Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many swords will Morocco gain compared to the "without trade" numbers?
A) 0 B) 15 C) 60 D) 75
Which of the following statements about taxation is incorrect?
a. A tax cut affects aggregate demand indirectly. b. A tax cut raises income and expenditures. c. Cutting taxes by $20 is not the same as increasing government spending by $20. d. A change in taxes does not affect consumption. e. An increase in taxes decreases income and expenditures.