Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. 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 the nominal value of the domestic currency in the context of the
Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Economic models must be tested with data to see if they are correct.
Answer the following statement true (T) or false (F)
A firm should shut down in the short run if the price is less than the:
A) average fixed cost. B) average total cost. C) average variable cost. D) marginal cost.
List four government expenditure programs designed to redistribute income
What will be an ideal response?
The classical model explains away unemployment as a long-run problem by assuming that
a. coordination in labor markets will occur within an acceptable period of time b. the economy consists of multiple, coordinated sectors c. it causes firms to cut back on their long-run production plans d. what is a problem during one period will seem more like an opportunity for economic growth during another period e. higher saving will stimulate increased investment