Regarding our rule-of-thumb for determining what causes changes ...

[olgavictoria]

Regarding our rule-of-thumb for determining what causes changes in a nation's monetary base, which of the following is not true:
 a. Only central banks are above the line.
  b. To increase the monetary base, funds have to be moved from above the line to below the line.
  c. Any time a central bank changes one of its major monetary tools, the monetary base changes.
  d. For the monetary base to change, the central bank must, in some way, be involved.
  e. All the above are true.

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 GDP Price Index in the context of the Three-Sector-Model?
 a. The quantity of real loanable funds per time period rises, and GDP Price Index rises.
  b. The quantity of real loanable funds per time period falls, and GDP Price Index falls.
  c. The quantity of real loanable funds per time period rises, and GDP Price Index falls.
  d. The quantity of real loanable funds per time period and GDP Price Index remain the same.
  e. There is not enough information to determine what happens to these two macroeconomic variables.

[katara]

Answer to Question 1

.C

Answer to Question 2

.A