Refer to the table. In relation to column (3), a change from column (1) to column (2) would mostly likely be caused by:
A. reduced taste for the good.
B. an increase in input prices.
C. consumers expecting that prices will be lower in the future.
D. government subsidizing production of the good.
A. reduced taste for the good.
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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 risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium. a. The real risk-free interest rate remains the same and reserve-related (central bank) transactions become more positive (or less negative). b. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
What are the two features of money that distinguish it from all other assets in the economy?
A. Money is a common unit of account and it can also be traded for other currencies at a guaranteed exchange rate. B. Money is part of every barter transaction and it is divisible. C. Money is government issued and it is redeemable for gold or silver. D. Money is accepted as a medium of exchange and it is the common unit of account used to express prices.