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 risk-free interest rate 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. The real risk-free interest rate rises and nominal value of the domestic currency remains the same.
b. The real risk-free interest rate falls and nominal value of the domestic currency remains the same.
c. The real risk-free interest rate and nominal value of the domestic currency remain the same.
d. The real risk-free interest rate 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
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In the figure above, if the firm is regulated using an average cost pricing rule, the deadweight loss created is equal to the area of
A) ABG. B) BEFG. C) BCFG. D) BCE. E) None of the above because there is no deadweight loss created.
Joshua consumes pizza and cola so that the marginal utility per dollar spent for the last piece of pizza consumed per week is 3 while the marginal utility per dollar spent for the last cola consumed is 1.5 . Joshua should spend more of his income on pizza and less on cola in order to maximize utility
a. True b. False
In a Nash equilibrium:
A. the strategy played by an individual depends upon the strategy played by other players B. the strategy played by each individual is a best response to the strategies played by everyone else C. there is no incentive for any player to deviate D. All of these are correct.
A financial intermediary less strictly regulated than a bank, and with no government guaranteed deposits is known as a
a. non-bank. b. junior bank. c. secondary bank. d. trade bank. e. intermediary bank.