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 real GDP and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP remains the same and reserve-related (central bank) transactions becomes more positive (or less negative).
b. Real GDP falls and reserve-related (central bank) transactions remains the same.
c. Real GDP and reserve-related (central bank) transactions remain the same.
d. Real GDP rises and reserve-related (central bank) transactions remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
If Year 1 is the base year, the GDP price deflator for Year 2 is approximately
A) 100.0. B) 126.3. C) 131.3. D) 181.0.
Answer the following statements true (T) or false (F)
1. Although the number of jobs requiring computer knowledge has increased, these jobs are found primarily in low-wage industries. 2. Union membership in the United States has fallen to less than 15 percent of the workforce. 3. Household wealth is defined as income minus liabilities. 4. Because their earnings are highest, married couples between the ages of 35–54 hold the largest share of wealth in the United States. 5. Non family households earn less than 50 percent of the income earned by family households.
Which of the following is a defining characteristic of all perfectly competitive markets?
A. The market demand curve is perfectly elastic. B. All firms sell the same standardized product. C. Consumers display strong brand loyalty. D. Each firm in the market faces a perfectly inelastic demand curve.
Juanita makes $36 an hour at work. She has to take time off work to purchase her dress, so each hour away from work costs her $36 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.
