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 real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and real GDP rises.
b. The quantity of real loanable funds per time period rises, and real GDP remains the same.
c. The quantity of real loanable funds per time period and real GDP remain the same.
d. The quantity of real loanable funds per time period rises, and real GDP falls.
e. The quantity of real loanable funds per time period falls, and real GDP falls.
.A
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M1 consists of
A) currency only. B) currency plus travelers checks only. C) currency plus checkable deposits only. D) checkable deposits only. E) none of the above
A normal profit is:
A. the average profitability of a firm over one complete business cycle. B. calculated by subtracting explicit costs from total revenue. C. the "price" required to retain entrepreneurial talent in some particular line of production. D. the amount by which total revenue exceeds total operating costs.