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 real GDP and current international transactions balance in the context of the Three-Sector-Model?
a. Real GDP falls and current international transactions balance becomes more negative (or less positive).
b. Real GDP rises and current international transactions balance becomes more negative (or less positive).
c. Real GDP and current international transactions balance remain the same.
d. Real GDP rises and current international transactions balance remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
a. Aggregate demand falls, and aggregate supply rises.
b. Aggregate demand and aggregate supply rise.
c. Aggregate demand rises, and aggregate supply falls.
d. Neither aggregate demand nor aggregate supply change.
e. None of the above.
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 real GDP and reserves account in the context of the Three-Sector-Model?
a. Real GDP rises and reserves account becomes more positive (or less negative).
b. Real GDP rises and reserves account remains the same.
c. Real GDP and reserves account remain the same.
d. Real GDP rises and reserves account remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
a. Aggregate demand rises, but aggregate supply does not change.
b. Aggregate demand falls, and aggregate supply rises.
c. Aggregate demand and aggregate supply rise.
d. Neither aggregate demand nor aggregate supply change.
e. Aggregate demand rises, and aggregate supply falls.
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 real GDP and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model?
a. Real GDP rises and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
b. Real GDP rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. Real GDP falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. Real GDP and net nonreserve international borrowing/lending balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 6 - If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
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 7 - 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 real GDP and the monetary base in the context of the Three-Sector-Model?
a. Real GDP rises and monetary base rises.
b. Real GDP rises and monetary base falls.
c. Real GDP and monetary base fall.
d. Real GDP and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 8 - If the price of inputs falls and the level of consumer indebtedness rises:
a. Aggregate demand falls, and aggregate supply rises.
b. Aggregate demand and aggregate supply rise.
c. Aggregate demand rises, and aggregate supply falls.
d. Neither aggregate demand nor aggregate supply change.
e. None of the above.
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