Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and real GDP rises.
b. The real risk-free interest rate rises and real GDP remains the same.
c. The real risk-free interest rate and real GDP remain the same.
d. The real risk-free interest rate falls and real GDP falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs, the city is using a ________ allocation method
A) majority rule B) market price C) contest D) personal characteristics E) command
Which of the following is most likely to be true of economic and accounting profits?
a. Economic profits are less than accounting profits. b. Accounting profits are less than economic profits. c. Economic profits plus accounting profits equal zero. d. Accounting profits minus economic profits equal zero.