In the above figure, an increase in income is best demonstrated by a
A) shift of D1 to D2 in Graph A, if good A is a normal good.
B) shift of D2 to D1 in Graph A, if good A is a normal good.
C) movement along D0 from P1 to P2 in Graph B.
D) movement along D0 from P2 to P1 in Graph B.
A
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A decrease in the price of VCRs will increase demand for video cassettes
a. True b. False Indicate whether the statement is true or false
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. Real GDP falls, and reserve-related (central bank) transactions become more negative (or less positive). b. Real GDP falls and reserve-related (central bank) transactions remain the same. c. Real GDP and reserve-related (central bank) transactions remain the same. d. Real GDP 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.