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 GDP Price Index and current international transactionsin the context of the Three-Sector-Model?
a. The GDP Price Index rises, and current international transactionsbecomes more negative (or less positive).
b. The GDP Price Index and current international transactionsremain the same.
c. The GDP Price Index falls, and current international transactionsremains the same.
d. The GDP Price Index falls, and current international transactionsrises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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When consumption and leisure are both normal goods, after an increase in real dividend income minus taxation, the rational consumer
A) increases consumption and increases leisure. B) increases consumption and reduces leisure. C) reduces consumption and increases leisure. D) reduces consumption and reduces leisure.
To an economist, a decrease in supply means a: a. rightward shift of the supply curve
b. movement up along a supply curve. c. leftward shift of the supply curve. d. movement down along the supply curve.