Assume that the central bank purchases government securities in the open market. 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 GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period and GDP Price Index remain the same.
b. The quantity of real loanable funds per time period rises, and GDP Price Index falls.
c. The quantity of real loanable funds per time period rises, and GDP Price Index rises.
d. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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A fall in the price of foreign inputs leads to a
A) rightward shift of the AD curve. B) leftward shift of the AD curve. C) rightward shift of the SRAS curve. D) leftward shift of the SRAS curve.
The demand for microwaves in a certain country is given by: D = 8,000-30P, where P is the price of a microwave. Supply by domestic microwave producers is: S = 4,000 + 10P. Suppose the economy is closed. The equilibrium price of a microwave is ________ and equilibrium quantity is____.
A. $100; 5000 B. $125; 4000 C. $50; 8000 D. $75; 6000