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 current international transactions balance 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 current international transactions balance becomes more negative (or less positive).
b. Real GDP rises and current international transactions balance becomes more negative (or less positive).
c. Real GDP and current international transactions balance remain the same.
d. Real GDP rises and current international transactions balance remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - The Islamic waqf is:
a. a permanent trust
b. the founder's instructions can be changed at will
c. no different from a western corporation
d. requires interest payments
e. both a and b are correct
Question 3 - Contractionary monetary policy causes:
a. Aggregate demand to rise, prices to rise, and real GDP to fall.
b. Aggregate demand to rise, prices to rise, and real GDP to rise.
c. Aggregate demand to fall, prices to fall, and real GDP to fall.
d. Aggregate supply to rise, prices to rise, and real GDP to rise.
e. Aggregate supply to rise, prices to rise, and real GDP to fall.
Question 4 - 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 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. Real GDP remains the same and reserve-related (central bank) transactions becomes more positive (or less negative).
b. Real GDP falls and reserve-related (central bank) transactions remains the same.
c. Real GDP and reserve-related (central bank) transactions remain the same.
d. Real GDP 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.
Question 5 - Islamic economics promotes the organization of production through large partnerships.
a. True
b. False
Question 6 - An increase in the real risk free interest rate 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.
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