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 current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index and current international transactions remain the same.
b. The GDP Price Index falls, and current international transactions become more negative (or less positive).
c. The GDP Price Index rises, and current international transactions becomes more negative (or less positive).
d. The GDP Price Index rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Which of the following was a source of the U.S. federal government's financial revenue for World War II (1941–45)?
(a) Tariffs (b) Bond sales to other governments (c) Bond sales to the Federal Reserve System (d) Bond sales to the U.S. Congress
The price of bonds and the interest rate are
a) positively related b) negatively related c) sometimes positively related and other times negatively related, depending on the bond payments d) not related