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 risk-free interest rate and net nonreserve international borrowing/investing in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and net nonreserve international borrowing/investing becomes more positive (or less negative).
b. The real risk-free interest rate falls and net nonreserve international borrowing/investing becomes more negative (or less positive).
c. The real risk-free interest rate rises and net nonreserve international borrowing/investing becomes more negative (or less positive).
d. The real risk-free interest rate and net nonreserve international borrowing/investing remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Suppose firms in Hong Kong can produce 40,000 plastic dolls or 80,000 squirt guns each week, while firms in Taiwan can produce 40,000 plastic dolls or 40,000 squirt guns each week. Therefore, when we compare the two groups:
A) the costs of production are the same in each country. B) the people in Hong Kong are the most efficient producers of both plastic dolls and squirt guns. C) the people in Taiwan produce plastic dolls with the same efficiency as Hong Kong. D) none of the above are true.
Real income equals a household's income
A) in terms of the quantity of goods the household can buy. B) multiplied by the prices of the goods it buys. C) divided by the prices of the goods it buys. D) multiplied by the relative prices of the goods it buys.
Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?
The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.
Point T is:
A. both attainable and efficient. B. attainable. C. efficient. D. neither attainable nor efficient.