Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and monetary base in the context of the Three-Sector-Model?
a. The GDP Price Index rises and monetary base rises
b. The GDP Price Index rises and monetary base falls.
c. The GDP Price Index and monetary base fall.
d. The GDP Price Index 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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Engerman's (1971) studies of the Civil War (1861–1865)'s impact on industrialization
(a) support the previous work of Hacker and Beard. (b) showed that the War sped up the ongoing processes of industrialization. (c) showed that the War effort slowed down industrialization. (d) restricted the real cost of the War to the South.
The main process by which a recessionary gap is eliminated is a(n)
a. increase in wages that shifts the aggregate supply curve inward. b. drop in wages that shifts the aggregate demand curve inward. c. increase in wages that shifts the aggregate demand curve outward. d. drop in wages that shifts the aggregate supply curve outward.
The velocity of circulation, V, is equal to
A. PQ. B. MQ. C. PQ/M. D. M/PQ.
Fiscal policy refers to the
A. adjustment of government spending and taxes in order to achieve certain national economic goals. B. government policy that aims at raising the market prices of certain goods. C. adjustment of national income data to account for price level changes. D. manipulation of the money supply in order to increase the amount of cash that the government holds.