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 GDP Price Index and current international transactions balance in the context of the Three-Sector-Model?
a. The GDP Price Index falls and current international transactions
balance becomes more negative (or less positive).
b. The GDP Price Index rises and current international transactions balance becomes more negative (or less positive).
c. The GDP Price Index and current international transactions balance remain the same.
d. The GDP Price Index rises and current international transactions balance remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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What will be an ideal response?
Business structure has remained relatively stable over the history of American business
Indicate whether the statement is true or false
If a country fixes its exchange rate below the equilibrium value,
a. the central bank must buy its own b. there will be downward pressure on the exchange rate c. its currency will appreciate d. the result is an excess demand for that country's currency e. its currency will depreciate
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