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 net nonreserve international borrowing/investing and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium

a. The net nonreserve international borrowing/lending balance becomes more positive (or less negative) and monetary base rises.
b. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base remains the same.
c. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base falls.
d. The net nonreserve international borrowing/lending balanceand monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.


.B

Economics

You might also like to view...

Which of the following goods has a perfectly inelastic supply?

A) insulin B) Diet Pepsi C) the original portrait of "Whistler's Mother" D) compact discs by Bush

Economics

You are given the following information

Savings S = 150 Investment I = 100 Taxes T = 250 Government Purchases G = 500 Compute the level of private savings, public savings, national savings, and net exports.

Economics

The short-run supply curve for a firm in a perfectly competitive market is

a. horizontal. b. likely to slope downward. c. determined by forces external to the firm. d. the portion of its marginal cost curve that lies above its average variable cost.

Economics

Giorgio wants to build a new distribution warehouse for his sporting goods business and is going to issue new shares of stock to do so. This is an example of using ________ for his building project

A) direct finance B) indirect finance C) retained earnings D) dividends

Economics