Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed 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 quantity of real loanable funds per time period rises and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls and nominal value of the domestic currency remains the same.
c. The quantity of real loanable funds per time period rises and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period falls 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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Assuming that the Federal Reserve Banks sell $40 million in government securities to commercial banks and the reserve requirement is 20%, then the effect will be to reduce ________.
A. the money supply by potentially $200 million B. excess reserves by $8 million C. excess reserves by $200 million D. the money supply by potentially $400 million
The standard view in economics is that tax cuts without ________ will ________ the budget deficit resulting in ________
A) increasing spending; decrease; unemployment B) spending cuts; decrease; unemployment C) increasing spending; increase; crowding out investment D) spending cuts; decrease; crowding out investment E) spending cuts; increase; crowding out investment
When medical fee schedules are negotiated by two monopolists—one representing patients and one representing providers—the equilibrium medical fees will
a. be greater than fees determined in a competitive market. b. be less than fees determined in a competitive market. c. be greater than fees determined by provider groups alone. d. be less than fees determined by patient groups alone. e. depend on the relative bargaining strengths of the two groups negotiating the fee schedule.
A binding price floor creates
a. deadweight loss. b. consumer surplus. c. producer surplus. d. deadweight gain.