On the graph of GDP, government spending and net exports are:
A. horizontal lines because they are autonomous expenditures.
B. vertical lines because the level of spending is fixed.
C. upward sloping because they increase as GDP increases.
D. downward sloping because they decrease as GDP increases.
Answer: A
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Suppose there are two market structures: A and B. Market A is characterized by free entry and exit of firms and firms under this structure face a horizontal demand curve. Market B has only one seller. Identify the market structures
Comment on the pricing mechanism, long-run profitability, and social surplus under both market structures.
A monopoly which arises from significant economies of scale is referred to as a
A) monopolistic competitor. B) strategic resource monopoly. C) natural monopoly. D) patent monopoly.
If there is a recession, the Fed would most likely
a. encourage banks to provide loans by lowering the discount rate b. encourage banks to provide loans by raising the discount rate c. restrict bank lending by lowering the discount rate d. restrict bank lending by raising the discount rate e. restrict bank lending by lowering the federal funds rate
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more negative (or less positive). b. Real GDP and current international transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. Real GDP falls, and current international transactions become more negative (or less positive). e. Real GDP rises, and current international transactions remain the same.