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 net nonreserve international borrowing/investing and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The net nonreserve international borrowing/lending balance becomes more positive (or less negative) and monetary base rises.
b. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base remains the same.
c. The net nonreserve international borrowing/lending balance becomes more negative (or less positive) and monetary base falls.
d. The net nonreserve international borrowing/lending balanceand monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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In monopolistic competition, profit is maximized when the amount produced is such that
A) marginal revenue equals marginal cost. B) marginal revenue is greater than marginal cost. C) total revenue equals total cost. D) total revenue is maximized.
Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100"
What will be an ideal response?