Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and reserves account in the context of the Three-Sector-Model?
a. The GDP Price Index rises and reserves account becomes more positive (or less
negative).
b. The GDP Price Index falls and reserves account remains the same.
c. The GDP Price Index and reserves account remain the same.
d. The GDP Price Index rises and reserves account remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Denise owns a plant that produces watch parts in Ohio. Denise noticed that when she hired the last worker, that worker's marginal product exceeded the marginal product of the previous worker
As a result, when the last worker was hired, Denise's average product of labor A) decreased. B) increased. C) did not change. D) perhaps changed, but there is not enough information to determine whether or not it did change. E) equals the marginal product of labor.
Cartel agreements are difficult to sustain because:
A. cartel members do not face the economic incentives inherent in a prisoner's dilemma. B. it's a dominant strategy for each cartel member to cheat on the cartel agreement. C. the collective payoff to all the cartel members is lower when they all abide by the cartel agreement. D. it's usually easy to discover if one of the members has cheated.