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Author Question: Assume that the central bank lowers the discount to increase the nation's monetary base. If the ... (Read 93 times)

Pea0909berry

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on: Jun 30, 2018
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
 a. The real risk-free interest rate remains the same and reserve-related (central bank) transactions become more positive (or less negative).
  b. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive).
  c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same.
  d. The real risk-free interest rate and reserve-related (central bank) transactions remain the same.
  e. There is not enough information to determine what happens to these two macroeconomic variables.

Question 2

A nation can determine how close it is to the classical range by considering its:
 a. Export position.
  b. Net export position.
  c. Exchange rate.
  d. None of the above.


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JCABRERA33

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Reply #1 on: Jun 30, 2018
Answer to Question 1

.A

Answer to Question 2

.D


Pea0909berry

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

JaynaD87

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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