When resources are being used wastefully or inefficiently, the

Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions balance in the context of the Three-Sector-Model? a. The real risk-free interest rate falls and current

international transactions balance becomes more negative (or less positive). b. The real risk-free interest rate rises and current international transactions balance becomes more negative (or less positive). c. The real risk-free interest rate and current international transactions balance remain the same. d. The real risk-free interest rate rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.

Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should:

A. accept the raise because his after-tax income will rise by $1,500. B. reject the raise because his after-tax income will fall by $3,000. C. reject the raise because his after-tax income will fall by $4,500. D. reject the raise because his after-tax income will fall by $6,000.