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 reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive).
b. The real risk-free interest rate rises, and reserve-related (central bank) transactions become more negative (or less positive).
c. The real risk-free interest rate and reserve-related (central bank) transactions remain the same.
d. The real risk-free interest rate 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.
.D
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An increase in the quantity demanded is shown as
A) a movement along the demand curve. B) a movement toward the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. E) both a movement along the demand curve and a shift of the demand curve.
The table above shows techniques that can be used to produce 100 shirts. The technique that is NOT technologically efficient is
A) W. B) X. C) Y. D) Z.
Refer to Figure 7-2. Without the tariff in place, the United States produces
A) 12 million pounds of coffee. B) 26 million pounds of coffee. C) 33 million pounds of coffee. D) 45 million pounds of coffee.
If there is a sole producer of a good, and he faces no threat of competition, it is likely that:
A. government intervention will have no impact on the market. B. government intervention will raise prices to consumers. C. government intervention will increase total surplus. D. government intervention will make things better for buyers and sellers.