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 GDP Price Index and monetary base in the context of the Three-Sector-Model?
a. The GDP Price Index rises and monetary base rises.
b. The GDP Price Index rises and monetary base falls.
c. The GDP Price Index and monetary base fall.
d. The GDP Price Index and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - If the price of inputs falls and the level of consumer indebtedness rises:
a. Aggregate demand rises, and aggregate supply falls.
b. Aggregate demand rises, but aggregate supply does not change.
c. Aggregate demand falls, and aggregate supply rises.
d. Aggregate demand and aggregate supply rise.
e. Aggregate demand and aggregate supply fall.
Question 3 - 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 GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The GDP Price Index rises and nominal value of the domestic currency falls.
b. The GDP Price Index falls and nominal value of the domestic currency rises.
c. The GDP Price Index rises and nominal value of the domestic currency remains the same.
d. The GDP Price Index rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - If the price of inputs falls and the government deficit rises:
a. Aggregate demand falls, and aggregate supply rises.
b. Aggregate demand and aggregate supply rise.
c. Neither aggregate demand nor aggregate supply change.
d. None of the above.
Question 5 - 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 GDP Price Index and current international transactions balance in the context of the Three-Sector-Model?
a. The GDP Price Index falls and current international transactions balance becomes more negative (or less positive).
b. The GDP Price Index rises and current international transactions balance becomes more negative (or less positive).
c. The GDP Price Index and current international transactions balance remain the same.
d. The GDP Price Index rises and current international transactions balance remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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