Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and real GDP rises.
b. The real risk-free interest rate falls, and real GDP rises.
c. The real risk-free interest rate rises, and real GDP falls.
d. The real risk-free interest rate and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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What is gained when people engage in specialization and trade?
A) Specialization and trade allow people to consume outside their individual production possibilities frontiers. B) Specialization and trade allow people to consume at a point on their production possibilities frontiers. C) Specialization and trade allow people to produce outside their individual production possibilities frontiers. D) Specialization and trade allow people to consume inside their production possibilities frontiers. E) There are no gains from specialization and trade.
A person can cause a negative externality by
a. becoming immunized b. talking loudly in a restaurant c. landscaping her lawn d. paying taxes e. attending school
During 1980-2010, the per-capita incomes of less-developed countries (LDCs)
a. grew rapidly. b. declined. c. were virtually unchanged. d. registered a mixed growth record; some grew rapidly while others stagnated.
The Pet Emporium hires workers to bathe cats. The Emporium sells this service for $20. The marginal revenue product of this store?s fifth worker is $100. The marginal product of the fifth worker is
A. 0.2 bathed cats. B. 1 bathed cat. C. 5 bathed cats. D. indeterminate from this information.