Steve can tell if his car has been fixed or not—it works, or it doesn't—but he cannot tell how it was fixed. The car repair is a(n)

When the government runs a large deficit,

A) the supply of loanable funds will shift rightward. B) the supply of loanable funds will shift leftward. C) the demand for loanable funds will shift rightward. D) the demand for loanable funds will shift leftward. E) taxes must rise.

Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?

a. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). c. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. Real GDP falls, and net nonreserve-related international borrowing/lending does not change. e. There is not enough information to determine what happens to these two macroeconomic variables.