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 real GDP and the monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP rises and monetary base rises.
b. Real GDP rises and monetary base falls.
c. Real GDP and monetary base fall.
d. Real GDP and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.D
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Someone who says he loves his mother far more than he loves football but nonetheless attends a football game when he could be visiting his mother
A) displays weakness of will. B) is a hypocrite. C) is behaving inconsistently with his own stated values. D) places a lower marginal value on visiting his mother than on attending the football game. E) shows that the marginal value of visiting his mother is less for him than the marginal cost of attending the football game.
Suppose a hurricane causes a great deal of destruction in Florida. After the hurricane, it takes much longer than usual for the reconstruction to take place. A possible explanation for this is
A) greed by suppliers of construction materials increased. B) government prevented price gouging during the reconstruction period. C) prices of construction materials fell in the Midwest. D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.