Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible 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. Real GDP falls, and nominal value of the domestic currency rises.
b. Real GDP rises, and nominal value of the domestic currency falls.
c. Real GDP rises, and nominal value of the domestic currency rises.
d. Real GDP rises, and nominal value of the domestic currency remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
The "life cycle" hypothesis sates that
a. MPC remains constant as national income rises b. MPC varies with age c. transitory income determines consumption d. MPC varies with permanent income e. consumption spending is independent of income
In a mixed open economy, which of the following all affect the equilibrium GDP in the same direction?
A. C a , I g , S a , and M. B. S a , T, and M. C. I g , T, and C a . D. S a , I g , and X.