Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the nominal exchange rate and monetary base in the context of the Three-Sector-Model?
a. The nominal exchange rate rises and monetary base rises.
b. The nominal exchange rate falls and monetary base falls.
c. The nominal exchange rate remains the same and monetary base falls.
d. The nominal exchange rate and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - Borrowing VCU3 from an online company cause the nation's:
a. Monetary base to fall.
b. M2 money supply to rise.
c. M2 money multiplier to remain the same.
d. M2 money supply to fall.
Question 3 - Feature(s) of the market for corporate control:
a. hostile takeovers
b. highly rated bond financing
c. managerial capitalism
d. related party transactions
e. all of the above
Question 4 - Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the net nonreserve international borrowing/investing balanceand monetary base in the context of the Three-Sector-Model?
a. The net nonreserve international borrowing/investing balance becomes more positive (less negative) and monetary base rises.
b. The net nonreserve international borrowing/investing balance becomes more negative (less positive) and monetary base falls.
c. The net nonreserve international borrowing/investing balance becomes more negative (less positive) and monetary base falls.
d. The net nonreserve international borrowing/investing balance 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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