Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and current international transactions become more negative (or less positive).
b. Real GDP rises, and current international transactions become more negative (or less positive).
c. Real GDP and current international transactions remain the same.
d. Real GDP rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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In comparing long-run and short-run costs, which of the following statements is true at each level of output?
a. long-run total cost is always less than short-run total costs b. long-run total cost cannot exceed short-run total cost c. long-run and short-run total costs are equal when fixed costs are large d. firms usually make decisions about production levels based on long-run costs rather than short-run costs e. short-run total cost cannot exceed long-run total cost
One of the reasons why firms pollute the air is that
A. use of the air is not easily excludable. B. use of the air is costless to society. C. use of the air is excludable. D. moral hazard creates incentives to pollute the air.