According to the classical macroeconomic model discussed in the text, the key variable which adjusts to keep the economy in equilibrium when leakages are not equal to injections is ...

Refer to the above figure. This firm is operating in the

A) long run since economic profits are greater than zero. B) long run since economic profits are less than zero. C) short run since economic profits are greater than zero. D) short run since economic profits are less than zero.

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 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 become more negative (or less positive). b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same. 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.