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 the nominal value of the domestic currency in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns
to complete equilibrium.
a. Real GDP rises and nominal value of the domestic currency remains the same.
b. Real GDP falls and nominal value of the domestic currency remains the same.
c. Real GDP and nominal value of the domestic currency remain the same.
d. Real GDP rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
You might also like to view...
A decrease in the real interest rate outside of the United States will cause the dollar to ________ relative to other currencies and ________ net exports and real GDP
A) appreciate; increase B) appreciate; reduce C) depreciate; increase D) depreciate; reduce
A dynamic decision is one that
A) is made very quickly. B) involves only the present. C) involves only the future. D) involves planning over more than one time period.
Number of workersUnits of output00110230344455
Refer to Table 5.1, which gives a firm's production function. Assume that all non-labor inputs are fixed. Marginal product is maximized when the firm hires:
A. 2 workers. B. 3 workers. C. 4 workers. D. 5 workers.
The U.S. government suspended the convertibility of the dollar into gold in
A) the 1930s. B) the 1950s. C) the 1970s. D) 1991, when the first Gulf War broke out.