In the classical model, a tax on capital will
a. increase the demand for labor, the real wage, and output.
b. increase the supply of labor, reduce real wages, and increase output.
c. decrease the demand for labor, the real wage, and output.
d. have no effect on the labor market.
e. increase both labor demand and supply, which will increase output.
C
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Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions become more positive (or less negative). c. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive). d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Economics is the study of
a. how to make money. b. choices in a world of scarcity. c. how to distribute unlimited production among limited wants. d. All of the above.