Assume a nation has a fixed exchange rate, and the central bank lowers the discount rate. What is the net effect on the unemployment rate? Answer assuming all the adjustments have worked their way through the macroeconomic system, and it is in equilibrium

a. The unemployment rate rises.
b. The unemployment rate falls.
c. The unemployment is not affected.
d. The change in the unemployment rate depends on the degree of international capital mobility.


.C

Economics

You might also like to view...

Refer to the figure below. In the figure, a business cycle peak is shown by which point(s)?

A. D only B. A and C and E C. E only D. B and D

Economics

Physical capital is:

A. the stock of equipment and structures that allow for the production of goods and services. B. the skills a human being acquires that enhances the available stock of equipment. C. the set of skills, knowledge, experience, and talent that determine the productivity of workers. D. All of these describe physical capital.

Economics

If the reserve ratio is 20 percent, then the money multiplier is approximated to be:

A. 20. B. 5. C. 10. D. 2.

Economics

If the real interest rate is below equilibrium, which of the following is likely to occur? a. Lenders will raise their interest rates which will encourage saving

b. Lenders will raise their interest rates which will encourage borrowing. c. Lenders will lower their interest rates which will encourage saving. d. Lenders will lower their interest rates which will encourage borrowing.

Economics