Reverse causation is the idea that
A) current increases in output cause future increases in the money supply.
B) current increases in the money supply cause future increases in output.
C) expected future increases in the money supply cause increases in current output.
D) expected future increases in output cause increases in the current money supply.
D
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The phase in the business cycle in which real GDP begins to decline is called a
a. trend b. peak c. downturn d. recovery e. trough
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 low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and GDP Price Index rises. b. The quantity of real loanable funds per time period falls, and GDP Price Index falls. c. The quantity of real loanable funds per time period rises, and GDP Price Index falls. d. The quantity of real loanable funds per time period falls, and GDP Price Index remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.