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 GDP Price Index and net nonreserve international borrowing/lending balancein the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium.
a. The GDP Price Index remains the same and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
b. The GDP Price Index rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. The GDP Price Index falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. The GDP Price Index and net nonreserve international borrowing/lending balanceremain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Which of the following is likely to cause a fall in the wage rate and an increase in the number of workers hired in a local cotton mill?
A) A reduction in wage paid in a nearby jute mill B) The introduction of labor-saving technology in the mill C) The introduction of labor-complementary technology in the mill D) A decrease in the population of the region in which the cotton mill is located
Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement?
A) The demand curve for California wine shifts to the right in anticipation of higher prices in the future. B) The demand curve for California wine shifts to the left in anticipation of higher prices in the future. C) The supply curve for California wine shifts to the left in anticipation of lower quantities in the future. D) The supply curve for California wine shifts to the right in anticipation of higher prices in the future.
Formal economic reasoning applied to situations in which decisions are interdependent is called:
A. competitive decision making. B. game theory. C. monopolistic decision making. D. economic decision making.
When the price level falls, the total quantities of goods and services demanded:
A. decrease. B. stay the same. C. increase. D. increases and then decreases.