Assume that the central bank sells government securities in the open market. 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 negative (or less positive).
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

Economics

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Economics