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 reserves account and monetary base in the context of the Three-Sector-Model?
a. The reserves account falls and monetary base falls
b. The reserves account rises and monetary base falls.
c. The reserves account and monetary base remain the same.
d. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Typically bond prices fall as interest rates rise
Indicate whether the statement is true or false
Interlace, Inc produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing price is ________ per bottle
A) 70 cents B) 50 cents C) 40 cents D) 1 dollar
In the long run, monetary policy can
a. change the form of inflation b. change the type of unemployment c. change the level of unemployment d. stop the flow of currency abroad e. change the rate of inflation
List and describe the three major monetary policy tools the Federal Reserve can use to increase the money supply. Be specific in your response regarding which direction the tool would need to change in order for the money supply to grow