Assume that the central bank purchases government securities in the open market. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model?
a. Real GDP rises, and current international transactions become more positive (or less negative).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. Real GDP rises, and current international transactions remain the same.
d. Real GDP falls, and current international transactions become more negative (or less positive).
e. Real GDP and current international transactions remain the same.
.A
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