Which of the following is not a reason for international trade?
a. Differences in resource endowments
b. Diseconomies of Scale
c. Differences in tastes
d. All of the above are reasons for international trade.
b
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Which of the following will result in an upward rotation of the consumption function?
a. A decrease in the proportional tax rate on income b. An increase in consumer income c. An increase in the flat tax rate d. A decrease in the flat tax rate
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 risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and GDP Price Index falls. b. The real risk-free interest rate rises, and GDP Price Index falls. c. The real risk-free interest rate and GDP Price Index remain the same. d. The real risk-free interest rate falls, and GDP Price Index remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.