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 and monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. The quantity of real loanable funds rises and monetary base rises.
b. The quantity of real loanable funds rises and monetary base falls.
c. The quantity of real loanable funds and monetary base fall.
d. The quantity of real loanable funds and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - If a nation experiences a significant improvement in technology that affects only Aggregate Supply, then its:
a. Average price level and real GDP should remain constant until there is a change in Aggregate Demand.
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 3 - 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 GDP and net nonreserve-related borrowing/investing in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. Real GDP remains the same and net nonreserve-related borrowing/investing becomes more negative (or less positive).
b. Real GDP rises and net nonreserve-related borrowing/investing becomes more negative (or less positive).
c. Real GDP falls and net nonreserve-related borrowing/investing becomes more positive (or less negative).
d. Real GDP and net nonreserve-related borrowing/investing remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - An increase in a nation's wealth causes its:
a. Aggregate demand to fall, the average price level to fall, and real GDP to rise.
b. Aggregate supply to rise, the average price level to rise, and real GDP to rise.
c. Aggregate demand to rise, the average price level to rise, and real GDP to rise.
d. Aggregate supply to fall, the average price level to rise, and real GDP to fall.
e. Aggregate demand to fall, the average price level to fall, and real GDP to fall.
Question 5 - 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 GDP and the monetary base in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
a. Real GDP rises and monetary base rises.
b. Real GDP rises and monetary base falls.
c. Real GDP and monetary base fall.
d. Real GDP and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
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