Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real exchange rate and monetary base in the context of the Three-Sector-Model? Assume the nominal exchange rate is stated as: (Domestic currency per foreign currency).
a. The
real exchange rate rises and monetary base rises.
b. The real exchange rate falls and monetary base falls.
c. The real exchange rate rises and monetary base falls.
d. The real exchange rate and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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A. Change in the income of buyers of milk B. Change in the price of milk C. Change in input prices for milk D. All of these responses are correct.
Military spending is a good example of an automatic stabilizer
a. True b. False Indicate whether the statement is true or false
The use of thorough job orientation helps to increase productivity through
A. mass production. B. participative decision making. C. training and education. D. quality of work life.
Suppose individuals decide to reduce their holdings of money market funds. Further assume that these decisions put funds into checkable deposits. Given this information, we know that
A) the demand for M1 would increase and the demand for M2 would decrease. B) the demand for M1 would decrease and the demand for M2 would decrease. C) the demand for M1 would increase and the demand for M2 would increase. D) the demand for M1 would decrease and the demand for M2 would increase. E) none of the above