Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the current international transactions balance and the monetary base in the context of the Three-Sector-Model?
a. The current
international transactions balance becomes more positive (or less negative) and monetary base rises.
b. The current international transactions balance becomes more negative (or less positive) and monetary base falls.
c. The current international transactions balance becomes more positive (or less negative) and monetary base falls.
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.
.A
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As a percentage of total federal expenditures, national defense spending has _____ since the mid 1950s
a. slightly increased b. risen precipitously c. essentially stayed the same d. declined
At any given moment there is one exchange rate: a. for all the world's currencies
b. for currencies in the free world. c. between every pair of currencies. d. established by the Federal Reserve System.