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 GDP Price Index 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 falls and GDP Price Index falls.
b. The real risk-free interest rate rises and GDP Price Index falls.
c. The real risk-free interest rate and GDP Price Index remain the same.
d. The real risk-free interest rate falls and GDP Price Index rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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Who tends to receive the benefits from a public good that increases the desirability of living in a certain area?
a. Government. b. Residents. c. Landlords. d. No one.
An allocation in which one person can be made better off only by making someone else worse off is
A) inefficient. B) efficient. C) a partial equilibrium. D) a general equilibrium.
A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded. As a result: a. total revenue will decrease
b. total revenue will increase. c. total revenue will remain constant. d. the elasticity of demand will increase.
Brand loyalty is a phenomenon associated with perfectly competitive markets
Indicate whether the statement is true or false