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 the real exchange rate and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium. Assume the nominal exchange rate is stated
as: (Foreign currency/ Domestic currency).
a. The real exchange rate rises and monetary base rises.
b. The real exchange rate rises and monetary base falls.
c. The real exchange rate and monetary base fall.
d. The real exchange rate 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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A central bank commitment to a ________ rule for monetary growth can be conveyed by maintaining a ________ exchange rate
A) rigid, fixed B) rigid, flexible C) flexible, fixed D) non-inflationary, flexible
Which of the following statements is true?
a. National income is total income earned by households whereas personal income is total income received by households (including transfer payments). b. Disposable personal income equals personal income minus personal taxes. c. The expenditures approach and the income approach yield the same GDP figure. d. All of these.