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 quantity of real loanable funds per time period and GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and GDP Price Index rises.
b. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
c. The quantity of real loanable funds per time period rises, and GDP Price Index falls.
d. The quantity of real loanable funds per time period and GDP Price Index remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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The main fiscal policy challenge for the future in the United States is rising expenditure on
A) transfer programs. B) education. C) national defense. D) the net interest on the federal debt.
In the above figure, the equilibrium level of planned saving plus net taxes is
A) $1.0 trillion. B) $2.0 trillion. C) $3.0 trillion. D) $4.0 trillion.
A tax wedge:
A. refers to the difference in the price the buyer pays and the price the seller keeps. B. only occurs in markets when the tax is placed on sellers. C. only occurs in markets when the tax is placed on buyers. D. only occurs in markets when taxes are placed on large corporations.
The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?