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 real risk-free interest rate and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and nominal
value of the domestic currency falls.
b. The real risk-free interest rate falls and nominal value of the domestic currency remains the same.
c. The real risk-free interest rate rises and nominal value of the domestic currency remains the same.
d. The real risk-free interest rate rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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The figure above shows a natural monopoly that the government must regulate. If the government uses ________, the firm produces ________ units per week
A) the HHI; 50 B) an average cost pricing rule; 30 C) rate of return regulation; 40 D) social interest regulation; 30 E) a marginal cost pricing rule; 20
Which contracting party gains from the use of a more sophisticated contract?
a. The principal, who offers the contract. b. The agent, who accepts the contract. c. Both parties may lose. d. Both parties gain equally.
A tax is imposed on wine. Sellers will bear no burden from this tax if the: a. demand for wine is perfectly inelastic
b. demand for wine is perfectly elastic. c. demand for wine is unit elastic. d. supply curve for wine is perfectly inelastic.
Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his
first year. What are Sebastian's implicit costs from running his own business? a. $30,600 b. $55,600 c. $50,000 d. $75,600