Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency falls.
b. Real GDP falls, and nominal value of the domestic currency rises.
c. Real GDP rises, and nominal value of the domestic currency remains the same.
d. Real GDP rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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You enter a classroom, which is littered with newspapers. This is because
A) students are too lazy to clean up. B) maintenance people only clean once a day. C) it is a way to protest against the tuition rates. D) students do not pay for littering.
Which of the following is generally not an effective strategy to promote DVC growth?
A. Microlending. B. Human capital development. C. Fighting wars against neighbors to obtain resources and stimulate aggregate demand through arms spending. D. Controlling inflation.