Locke's contract theory stated that:
a. People must meet their contractual obligations to other citizens
b. People must meet their contract obligations to the state
c. Illegal contracts can be disputed in courts
d. The state must meet its social contract with its citizens
e. All of the above
Question 2
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 highly mobile 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 rises, and GDP Price Index falls.
b. The quantity of real loanable funds per time period falls, and GDP Price Index remains the same.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The quantity of real loanable funds per time period falls, and GDP Price Index rises.
e. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
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