Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to real GDP and 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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The short-run relationship between inflation and unemployment is often called
a. the Classical Dichotomy. b. Money Neutrality. c. the Phillips curve. d. None of the above is correct.
Which of the following is an accurate statement about a monopolistically competitive firm?
a. It uses ads to sell as much of a product as competitors do at the going price. b. It uses ads to continue selling a product even with decreasing prices. c. It uses ads to sell a product even with an expected price increase. d. It uses ads to sell more of a product than competitors do at the going price.