Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises.
d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
e. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
.E
You might also like to view...
Marginal costs are the costs relevant to a decision because they
A) are the costs that will be affected by the decision. B) the cost of producing one more unit of output. C) total cost divided by units of output. D) total cost minus sunk costs.
An unanticipated reduction in the level of prices in the goods and services market, which results in a temporary increase in real wage rates, will
a. increase the natural rate of unemployment. b. reduce the natural rate of unemployment. c. result in an actual rate of unemployment that is less than the natural rate of unemployment. d. result in an actual rate of unemployment that is greater than the natural rate of unemployment.