Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency falls.
b. Real GDP falls, and nominal value of the domestic currency rises.
c. Real GDP rises, and nominal value of the domestic currency remains the same.
d. Real GDP rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Suppose tastes are NOT monotonic anywhere. Then diminishing MRS is not consistent with convexity of tastes.
Answer the following statement true (T) or false (F)
The elasticity of the momentary supply curve for any good always equals
A) zero. B) one. C) positive infinity. D) None of the above answers is correct.
Refer to Figure 4-1. If the market price is $1.50, what is the consumer surplus on the second burrito?
A) $0.50 B) $1.00 C) $1.50 D) $3.50
Which of the following events would most likely cause the nominal interest rate to fall?
a. A decrease in the supply of loanable funds b. An increase in the demand for loanable funds c. An increase in the supply of loanable funds and an increase in the demand for loanable funds d. An increase in the supply of loanable funds and a decrease in the demand for loanable funds e. A decrease in the supply of loanable funds and an increase in the demand for loanable funds