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 real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
c. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
e. Real GDP and net nonreserve-related international borrowing/lending remain the same.
.D
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Suppose Jason owns a small pastry shop. Jason wants to maximize his profit, and thinking back to the microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost
Will Jason's strategy necessarily maximize profits for his pastry shop? A) No; In order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized. B) Yes; Since Jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized. C) Not necessarily; Depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum. D) Not necessarily; This strategy will only maximize Jason's profit in the long run, but not in the short run.
How does human specialization contribute towards increasing an economy's output?
A. It exploits the differences in abilities B. It is a process of creative destruction C. It pushes each worker to master the whole product D. It encourages people to be "jacks-of-all-trades"