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 the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and real GDP falls.
b. The real risk-free interest rate falls, and real GDP rises.
c. The real risk-free interest rate rises, and real GDP remains the same.
d. The real risk-free interest rate and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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In a closed economy,
A) I = Y + C + G. B) I = Y - C - G. C) I = Y - C + G. D) I = Y + C - G.
A corporation may be reluctant to raise capital by issuing stock because
a. issuing stock to obtain money for investment is riskier than selling bonds. b. holders of already-existing stock will gain more voting power in the corporation. c. obtaining government permission to issue stock can be time-consuming and expensive. d. All of the above are correct.