If a nation experiences a rapid increase in the number of immigrants, which increases its aggregate supply:
a. Average price level and real GDP should remain constant until the immigrants become citizens.
b. Average price level and real GDP should fall.
c. Average price level and real GDP should rise.
d. Average price level should fall, and real GDP should rise.
e. Average price level should rise, and real GDP should fall.
Question 2
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 quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. Real GDP rises and nominal value of the domestic currency remains the same.
b. Real GDP falls and nominal value of the domestic currency remains the same.
c. Real GDP and nominal value of the domestic currency remain 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.
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