Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the
Three-Sector-Model?
a. The GDP Price Index rises, and nominal value of the domestic currency falls.
b. The GDP Price Index falls, and nominal value of the domestic currency rises.
c. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
d. The GDP Price Index falls, and nominal value of the domestic currency falls.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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Assume that the market for consumer gasoline is perfectly competitive. When one additional seller (gas station) enters the market,
A) then at least one other seller must exit the market. B) the price of gasoline increases. C) the price of gasoline is left unaffected. D) the price of gasoline decreases. E) None of the above is correct.
When a commercial bank receives a deposit, it must keep part of the deposit as cash reserves to satisfy its
A) loan requirements. B) interbank loans. C) required reserves. D) securities and loans. E) excess reserves.
Suppose you buy a house for $250,000. One year later, the market price for the house has fallen to $200,000
What is the return on your investment in the house if you made a down payment of 10 percent and took out a mortgage loan for the other 90 percent?
In the United States, major money policy decisions are made by the ______.
a. 12 banks that comprise the Fed b. banks that have ownership of the Fed c. president of the United States with approval from the Senate d. Federal Reserve Board of Governors and the FOMC