If a county becomes less likely to default on its bonds, what happens to that country's interest rate and exchange rate? Explain
A lower probability of default has the opposite effects of capital flight. As foreigners desire to buy more domestic assets, NCO falls at any given interest rate so the domestic demand for loanable funds shifts left which drives the domestic interest rate down. Because the NCO curve shifts left, NCO falls despite the lower interest rate. This fall in NCO decreases the supply of dollars in the market for foreign-currency exchange, so that the domestic real exchange rate appreciates.
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Which of the following is not true about taste for work?
a. Everyone ends up in her or his most preferred job b. The transaction costs of job information and of changing jobs may prevent some desirable matchups c. Workers seek jobs in a way that tends to minimize the disutility of work d. Economists argue that your preferences are stable and you supply more labor to jobs you like e. Economists do not try to explain how work preferences develop
When the price of gasoline increases substantially, many consumers will
a. turn to fuel saving alternatives like hybrid vehicles. b. drive less. c. take public transportation. d. all of the above are true.
Good X sold for $40 in 1957. The CPI in 1957 was 27.6 and the CPI in 2014 was 244.537. What was the price of good X in 2014 dollars?
A) $514.60 B) $270.92 C) $1,201.60 D) $310.92 E) ?$354.40
Suppose P = 20 ? 2Q is the market demand function for a local monopoly. The marginal cost is 2Q. The firm currently uses a standard pricing strategy. Which of the following will allow the firm to enhance the profits?
A. Engage in commodity bundling. B. Engage in two-part pricing and engage in commodity bundling. C. Engage in two-part pricing. D. Engage in randomized pricing.