Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and monetary base in the context of the Three-Sector-Model?
a. Real GDP rises and monetary base rises

b. Real GDP rises and monetary base falls.
c. Real GDP and monetary base fall.
d. Real GDP and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.


.A

Economics

You might also like to view...

When estimating incremental environmental costs, the survey approach

a. relies on expert knowledge about abatement technology b. is a more direct means of gathering abatement cost data than the engineering approach c. finds the level of abatement expenditures based on least-cost technology d. suffers from no inherent biases associated with polluting sources

Economics

Suppose real money demand is L = 0.8 Y - 100,000 (r + ?e). If the nominal money supply is 12,000, real output is 15,000, the real interest rate is .02, and the expected inflation rate is .01, then the price level is

A) 3/4. B) 1. C) 4/3. D) 3.

Economics

By definition, an industry with high concentration also is highly competitive.

Answer the following statement true (T) or false (F)

Economics

Producer surplus equals

a. Value to buyers - Amount paid by buyers. b. Amount received by sellers - Costs of sellers. c. Value to buyers - Costs of sellers. d. Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Economics