Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and the monetary base in the context of the Three-Sector-Model?
a. Real GDP rises and monetary base falls
b. Real GDP falls and monetary base rises.
c. Real GDP and monetary base fall.
d. Real GDP 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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Structural unemployment may result from all of the following factors EXCEPT
A) improved elementary and secondary education. B) union wage contracts. C) government-imposed licensing arrangements that restrict entry into certain professions. D) welfare and unemployment benefits.
Which of the following is true of the aggregate demand curve?
a. The aggregate demand curve shows the various levels of expenditures in the economy at alternative price levels. b. The aggregate demand curve implies a positive relationship between inflation and unemployment. c. The aggregate demand curve is identical to the income consumption curve. d. The aggregate demand curve has the same slope as the aggregate supply curve. e. The aggregate demand curve relates relative prices to the quantity demanded of a particular good.
A cut in government spending, a decrease in income abroad, an increase in taxes, or an expectation that future income will fall causes aggregate
a. demand to shift outward b. demand to shift inward c. supply to shift outward d. supply to shift inward e. supply and aggregate demand to shift inward
Capital is a(n) ____ variable and investment is a ____ variable.
A. physical; financial B. stock; flow C. asset; liability D. flow; stock