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 GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and nominal value of the domestic currency falls.
b. The GDP Price Index falls, and nominal value of the domestic currency remains the same.
c. There is not enough information to determine what happens to these two macroeconomic variables.
d. The GDP Price Index rises, and nominal value of the domestic currency rises.
e. The GDP Price Index falls, and nominal value of the domestic currency rises.
.E
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Refer to the scenario above. If both firms operate without government intervention:
A) total costs are maximized. B) total profits are maximized. C) marginal revenues of both the firms are maximized. D) marginal revenues of both the firms are minimized.
Refer to Figure 12-9. At price P3, the firm would produce
A) Q2 units B) Q3 units. C) Q4 units. D) Q5 units.