Assume that the central bank purchases government securities in the open market. 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. There is not enough information to determine what happens to these two macroeconomic variables.
b. The GDP Price Index rises, and nominal value of the domestic currency rises.
c. The GDP Price Index falls, and nominal value of the domestic currency rises.
d. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
e. The GDP Price Index rises, and nominal value of the domestic currency falls.
.E
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In the aggregate demand and aggregate supply model, an increase in the growth rate of the velocity of money differs from an increase in money supply growth rate in that:
A. the SRAS curve will eventually shift back to its original position after an increase in money supply growth. B. the AD curve will eventually shift back to its original position after an increase in velocity growth. C. the SRAS curve will eventually shift upwards after an increase in velocity growth. D. the AD curve will eventually shift back to its original position after an increase in money supply growth.
Bonds and stocks act as complementary goods such that a rise in the price of one raises the demand for the other
a. True b. False Indicate whether the statement is true or false