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 quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. The quantity of real loanable funds per time period rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
c. The quantity of real loanable funds per time period falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The quantity of real loanable funds per time period and net nonreserve-related international borrowing/lending remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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When a business firm makes an investment in physical capital, that investment is subject to _____.
a. state and local government incentives b. economic output and productivity c. political orientated incentives d. the discipline of the market
Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.
a. True
b. False
Indicate whether the statement is true or false