Notes in circulation are:

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.

Fannie Mae and Freddie Mac:

a. Are government sponsored entities (GSE) b. Have a mandate to develop a secondary market in U.S. mortgages. c. Suffered severe economic losses and are now under conservatorship. d. All of the above.