As an exchange rate regime, target zones would be classified as

Use the following statements to answer this question

I. To maximize profit, a firm will increase its advertising expenditures until the last dollar of advertising generates an additional dollar of revenue. II. The full marginal cost of advertising is the sum of the dollar spent directly on advertising and the marginal production cost that results form the increased sales that advertising brings about. A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false.

Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed 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 rises and nominal value of the

domestic currency falls. b. The GDP Price Index falls and nominal value of the domestic currency rises. c. The GDP Price Index rises and nominal value of the domestic currency remains the same. d. The GDP Price Index rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.