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 net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. The quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending remain 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 net nonreserve-related international borrowing/lending becomes more positive (or less negative).
e. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
.E
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a. True b. False Indicate whether the statement is true or false
The primary tool of fiscal policy is
a. the money supply. b. the stock market. c. the federal budget. d. regulation of the bond market.
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A. quality adjustment; price adjustment B. price; quantity C. aggregation; price D. substitution; quality adjustment
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