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 real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same.
d. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
e. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
.D
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Increasing opportunity cost occurs along a production possibilities frontier because
A) resources are not equally productive in all activities. B) increasing wants need to be satisfied. C) in order to produce more of one good decreasing amounts of another good must be sacrificed. D) production takes time.
Refer to Scenario 15.5. If Catherine stopped smoking, then what is the total amount that Catherine will save on life insurance premiums over the rest of her expected lifespan?
A) $700 B) $14,000 C) $30,000 D) $42,000 E) $56,000