Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium.
a. The real risk-free interest rate remains the same and reserve-related (central bank) transactions become more positive (or less negative).
b. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive).
c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same.
d. The real risk-free interest rate and reserve-related (central bank) transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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The EEC currently includes all of the following countries except
a. Greece b. Britain c. Iceland d. Russia e. Belgium
Two goods are described as being complementary products if:
(a) They are used instead of each other. (b) They are products that people have to use. (c) They are usually used together. (d) None of the above.