If the U.S. government increased its spending by 100 billion and increased taxes by 100 billion, the net effect on Aggregate Demand would be:
a. Neutral (i.e., no change in aggregate demand).
b. To increase aggregate demand.
c. To decrease aggregate demand.
d. To increase aggregate supply.
e. To decrease aggregate supply.
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 quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and current international transactions become more positive (or less negative).
b. The quantity of real loanable funds per time period rises and current international transactions become more negative (or less positive).
c. The quantity of real loanable funds per time period and current international transactions remain the same.
d. The quantity of real loanable funds per time period rises and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 3 - If the value of the domestic currency depreciates:
a. Aggregate demand and aggregate supply rise.
b. Aggregate demand rises and aggregate supply falls.
c. Aggregate demand and aggregate supply fall.
d. Neither aggregate demand nor aggregate supply change.
e. None of the above.
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 quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and reserve-related (central bank) transactions become more negative (or less positive).
b. The quantity of real loanable funds per time period falls and reserve-related (central bank) transactions remain the same.
c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same.
d. The quantity of real loanable funds per time period 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.
Question 5 - If the value of the domestic currency depreciates:
a. Aggregate demand falls and aggregate supply rises.
b. Aggregate demand rises and aggregate supply rises.
c. Aggregate demand rises and aggregate supply falls.
d. Neither aggregate demand nor aggregate supply change.
e. None of the above.
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 quantity of real loanable funds per time period and net nonreserve international borrowing/investing in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/investing becomes more negative (or less positive).
b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/investing becomes more negative (or less positive).
c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/investing becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve international borrowing/investing remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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