Assume that the central bank increases the reserve requirement. 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 the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls.
b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises.
c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same.
d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - Liquidity risk is
a. The chance that you will not be able to get a drink when you need one.
b. The chance that financial assets cannot be sold quickly and without substantial loss of value or a company cannot gain sufficient access to cash.
c. The chance of a change in the market value of a security due to changes in macroeconomic variables, such as interest rates or exchange rates.
d. The risk that credit cannot be expanded by the banking system due to a central bank regulation.
e. The chance that borrowers will be unable or unwilling to repay their debts.
Question 3 - Assume that the central bank increases the reserve requirement. 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 real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and real GDP falls.
b. The quantity of real loanable funds per time period falls, and real GDP rises.
c. The quantity of real loanable funds per time period rises, and real GDP remains the same.
d. The quantity of real loanable funds per time period and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 4 - Market risk is:
a. The chance that financial assets cannot be sold quickly and without substantial loss of value.
b. The chance of a change in the market value of a security due to changes in macroeconomic variables, such as interest rates or exchange rates.
c. The risk that credit cannot be expanded by the banking system due to a central bank regulation.
d. The chance that borrowers will be unable or unwilling to repay their debts.
Question 5 - Assume that the central bank increases the reserve requirement. 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.
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