Central banks get the purchasing power to make discount loans by: ...

[moongchi]

Central banks get the purchasing power to make discount loans by:
 a. Reducing currency in circulation.
  b. Buying government securities.
  c. Taking loans from the government.
  d. Increasing their liabilities in the form of deposits from banks.

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 quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
 a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
  b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remains the same.
  c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same.
  d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remains the same.
  e. There is not enough information to determine what happens to these two macroeconomic variables.

[Tabitha_2016]

Answer to Question 1

.D

Answer to Question 2

.D

[moongchi]

Thanks for the timely response, appreciate it

[mcabuhat]

Wow, this really help