Assume that the central bank purchases government securities in the open market. If the nation has highly mobile 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. There is not enough information to determine what happens to these two macroeconomic variables.
b. The GDP Price Index rises, and nominal value of the domestic currency rises.
c. The GDP Price Index falls, and nominal value of the domestic currency rises.
d. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
e. The GDP Price Index rises, and nominal value of the domestic currency falls.
.E
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Suppose you have $400 and the inflation rate is 5 percent. In order to earn a real return of $16 on your investment, the nominal interest rate needs to be near
A) 0 percent. B) 4 percent. C) 6 percent. D) 9 percent.
Explain the difference between discretionary and automatic spending by the government.
What will be an ideal response?
Which of the following would help eliminate the trade deficit?
A. Reduced reservation wages B. Lower tariffs C. Expansionary fiscal policy D. A rise in the exchange rate
Earth Movers & Shakers operates 3 iron ore mines. The accompanying table shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Total Tons Per DayNumber of MinersMother Lode10025Scraping Bottom3010Middle Drift7515 The opportunity cost of moving one miner from Scraping Bottom to another mine is:
A. 3 tons per day. B. 4 tons per day. C. 0 tons per day. D. 5 tons per day.