Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile 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/lending balancein the context of the Three-Sector-Model? State your answer after the macroeconomic
system returns to complete equilibrium.
a. The quantity of real loanable funds per time period remains the same and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve international borrowing/lending balanceremain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
The ________ relation indicates that the interest differential between investments in two currencies will equal the forward premium or discount between the currencies
A) Fisher equation B) interest rate parity C) purchasing power parity D) term structure of interest rates
In the coordination failure model, a rightward shift in the labor supply curve
A) increases the real wage and increases employment. B) increases the real wage and decreases employment. C) decreases the real wage and increases employment. D) decreases the real wage and decreases employment.
An example of organizational architecture based on the different functions of a firm is when divisions are defined as
a. R&D, Engineering, Production, Marketing, Sales b. Component 1 Plant, Component 2 Plant, Component 3 Plant, Final Assembly c. Store 1, Store 2, Store 3, Region A, Region B, Sales Division d. Business Customers, Educational Customers, Household Customers
Positive statements are not
a. descriptive. b. prescriptive. c. claims about how the world is. d. made by economists speaking as scientists.