Assume that the central bank purchases government securities in the open market. 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 the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
b. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
d. There is not enough information to determine what happens to these two macroeconomic variables.
e. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
.C
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The marginal product of labor (measured in units of output) of a firm is given by MPN = A(2000 - N)
where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $6 per unit and A = 0.002. (a) What will be the demand for labor if the nominal wage is $18? (b) What will be the demand for labor if the nominal wage rises to $21?
A bank faces a required reserve ratio of 5 percent. If the bank has $200 million of checkable deposits and $15 million of total reserves, then how large are the bank's excess reserves?
a. $10 million b. $0 c. $5 million d. $15 million
When taxes are decreased, disposable income increases even though GDP is unchanged.
Answer the following statement true (T) or false (F)