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 quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and real GDP falls.
b. The quantity of real loanable funds per time period falls and real GDP rises.
c. The quantity of real loanable funds per time period rises and real GDP remains the same.
d. The quantity of real loanable funds per time period 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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Refer to Figure 2-10. In the circular flow diagram, economic agents M represent
A) product markets. B) firms. C) factor markets. D) households.
Ajax Corporation has just decided to let managers work from home one day a week. This decision will make working conditions better and will
A) cause the demand curve for labor for managers to increase. B) increase the elasticity of demand for labor for managers. C) lead to an increase in the supply curve of labor for managers. D) leave the supply curve of labor unchanged.