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 quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same.
b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions become more positive (or less negative).
c. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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From the end of the Civil War to the start of World War I, the direction of U.S. trade
(a) stayed the same. (b) was dominated by trade with Europe. (c) grew and broadened to include other countries in Asia and the Americas. (d) dwindled.
At a perfectly competitive firm’s profit-maximizing level of output, its total revenue is $200 and its short-run variable cost is $225. The firm
A. has a loss of $25. B. should shut down. C. should increase output to reduce losses. D. should raise the price of its product.