Refer to the above figure. If the price level is 80
A) the total planned real expenditures by individuals, businesses, and the government are less than total planned production by firms.
B) the aggregate demand curve will automatically shift leading to a stable equilibrium.
C) the economy will have economic growth and the new equilibrium price level will be 80.
D) the total planned real expenditures by individuals, businesses, and the government exceed total planned production by firms.
D
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The federal budget deficit acts as an automatic stabilizer because
A) Medicaid payments increase during expansionary periods. B) unemployment insurance payments decrease during a recession. C) food stamp payments increase during expansionary periods. D) government tax revenues decrease during a recession.
A bank's assets are
A) things the bank owes to someone else. B) things owned by or owed to the bank. C) a measure of the bank's net worth. D) always greater than the bank's liabilities.
The decision to form a currency union is similar to the decision to peg; however, the currency union requires:
A) a lower level of commitment and therefore requires a lower net benefit. B) a higher level of commitment and therefore requires a higher net benefit. C) more political integration and an agreement to limit trade. D) the loss of political autonomy and is therefore riskier.
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 exchange rate and the monetary base in the context of the Three-Sector-Model? Assume the nominal exchange rate is stated
as: (foreign currency per domestic currency). a. The real exchange rate rises and monetary base rises. b. The real exchange rate falls and monetary base falls. c. The real exchange rate rises and monetary base falls. d. The real exchange rate and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.