Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed 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? State your answer after the macroeconomic system returns
to complete equilibrium.
a. Real GDP rises and nominal value of the domestic currency remains the same.
b. Real GDP falls and nominal value of the domestic currency remains the same.
c. Real GDP and nominal value of the domestic currency remain the same.
d. Real GDP rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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Suppose chicken farm waste flowed into a river used by a neighbor for drinking water. The results of the Coase theorem s are relevant when the legal rights to the river are given to:
a. the chicken farm. b. the neighbor. c. either the chicken farm or the neighbor. d. neither the chicken farm nor the neighbor
A natural monopoly that charges the profit-maximizing price will produce ________ amount of output than a ________
A) a larger; natural monopoly regulated with an average cost pricing rule B) a more efficient; perfectly competitive industry C) the same; natural monopoly regulated with a marginal cost pricing rule D) a smaller; natural monopoly regulated with a marginal cost pricing rule