Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and current international transactions become more positive (or less negative).
b. The real risk-free interest rate rises, and current international transactions become more negative (or less positive).
c. The real risk-free interest rate falls, and current international transactions remain the same.
d. The real risk-free interest rate rises, and current international transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
In the above figure, if the minimum wage is set at $8 per hour, the level of unemployment is ________ hours per week is
A) 40 million B) 30 million C) 20 million D) 0
Whatever else you learned about profit-maximization, you should have learned this: Maximum profit is obtained at the production level where
a. P = AC b. TR = TC c. MR = AR d. MR = MC e. TR = MR
To a Marxist, income inequality derives from
a. purely random events b. incompetent government policy c. unequal education d. unequal distribution of property e. unequal abilities of individuals
In the 1970s and 1980s our productivity
A. increased at an increasing rate. B. Increased at a decreasing rate. C. Stayed about the same. D. decreased.