If banks pay back their borrowings from the central bank:
a. The monetary base will decrease.
b. Excess reserves will rise.
c. The M2 multiplier will fall.
d. The monetary base will rise.
Question 2
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and nominal value of the domestic currency falls.
b. The real risk-free interest rate falls, and nominal value of the domestic currency falls.
c. The real risk-free interest rate rises, and nominal value of the domestic currency remains the same.
d. The real risk-free interest rate rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Pink-eared Duck - At Central Park Zoo, New York, USA
Hydronephrosis. Normal kidney (left) and kidney with hydronephrosis (right) are compared. Note the d
Back muscles
Joseph Banks
Thumb petrissage back down the same side of the spine from shoulder to sacrum.
A Radio Telescope in Green Bank, West Virginia