Assume that the central bank increases the reserve requirement. 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 GDP Price Index in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending remain the same.
b. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
c. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
e. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
.C
You might also like to view...
Which of the following will increase the yield on a bond?
a. a reduction principal b. an increased risk of default c. an increase in the bond's price d. a reduced risk of default e. none of the above
Government borrowing in any given year is equal to the budget ___________________.
a. deficit b. surplus c. total d. amount
If the wage is kept above the equilibrium level because of minimum-wage laws, then the result is unemployment; if the wage is kept above the equilibrium level for some other reason, the result need not be unemployment
a. True b. False Indicate whether the statement is true or false
A tax that is placed on the quantity of the item being purchased, such as gallons of it, is called a(n)
A. Excise tax. B. Property tax. C. Income tax. D. None of the choices are correct.