If the economy is at point 1 in Figure 13.1 and there is no policy intervention, what happens next?
A) the economy moves to point 2
B) the economy remains at point 1
C) the economy moves to the left along the AS curve
D) the AS curve shifts down, causing both output and inflation to decline
E) the AS curve shifts up, causing both output and inflation to rise
D
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Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. 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 current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions become more positive (or less negative). b. There is not enough information to determine what happens to these two macroeconomic variables. c. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive). d. The quantity of real loanable funds per time period rises, and current international transactions remain the same. e. The quantity of real loanable funds per time period and current international transactions remain the same.
Consider the production possibilities frontier displayed in the figure shown. A society should choose to produce:
A. at any point on the frontier rather than inside it. B. at any point that produce some of each good. C. at point C because it is the safest. D. at point B because it represents the most the society can produce.