If the price of inputs rises and foreign income rises:
a. Aggregate demand and aggregate supply rise.
b. Aggregate demand and aggregate supply fall.
c. Neither aggregate demand nor aggregate supply change.
d. Aggregate demand rises, and aggregate supply falls.
e. None of the above.
Question 2 - Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and nominal value of the domestic currency falls.
b. The real risk-free interest rate falls and nominal value of the domestic currency remains the same.
c. The real risk-free interest rate rises and nominal value of the domestic currency remains the same.
d. The real risk-free interest rate 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 3 - If the price of inputs rises and foreign income rises:
a. Aggregate demand rises, but aggregate supply does not change.
b. Aggregate demand falls, and aggregate supply rises.
c. Aggregate demand and aggregate supply fall.
d. Neither aggregate demand nor aggregate supply change.
e. Aggregate demand rises, and aggregate supply falls.
Question 4 - Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and real GDP rises.
b. The real risk-free interest rate rises and real GDP remains the same.
c. The real risk-free interest rate and real GDP remain the same.
d. The real risk-free interest rate falls and real GDP falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 5 - If the price of inputs rises and foreign income 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 6 - Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and the monetary base in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and monetary base falls.
b. The real risk-free interest rate rises and monetary base falls.
c. The real risk-free interest rate falls and monetary base rises.
d. The real risk-free interest rate and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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