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 current international transactions balance and monetary base in the context of the Three-Sector-Model?
a. The current international transactions balance rises and
monetary base rises.
b. The current international transactions balance falls and monetary base falls.
c. The current international transactions balance falls and monetary base rises.
d. The current international transactions balance and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
a. equal to the profit maximizing level of output. b. equal to revenue maximizing level of output. c. less than the profit maximizing level of output. d. zero. e. greater than the profit maximizing level of output.
The nominal interest rate tells you how fast the number of dollars in your bank account rises over time
a. True b. False Indicate whether the statement is true or false