Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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 transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and current international transactions become more negative (or less positive).
b. The GDP Price Index rises, and current international transactions become more negative (or less positive).
c. The GDP Price Index and current international transactions remain the same.
d. The GDP Price Index rises, and current international transactions remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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A surplus of a good could possibly be eliminated by:
A. a sufficient increase in supply keeping price constant. B. the removal of a price floor. C. the removal of a price ceiling. D. a sufficient decrease in demand keeping price constant.
If it costs Microsoft $800 million to bring a new version of Windows to market, and if the marginal cost of producing one unit were $1, the ATC of producing 10 million units would be approximately ______.
Fill in the blank(s) with the appropriate word(s).