The international capital market is:
A) the international currency exchange.
B) a market in which capital assets are exchanged for services.
C) the market that is subject to intense regulation and must file a report to the Basel committee on a biannual basis.
D) not really a single market, but a group of closely interconnected markets in which asset exchanges with some international dimension take place.
E) an organization of fiscal policies that dictate international trade.
D
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If there is an economic profit in monopolistic competition, there is
a. an incentive for new firms to enter b. an incentive for existing firms to increase prices c. at least one firm engaged in advertising d. an incentive for existing firms to decrease prices e. the absence of product differentiation
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and the nominal value of the domestic currency in the context of the Three-Sector-Model? a. The GDP Price Index
rises and nominal value of the domestic currency remains the same. b. The GDP Price Index falls and nominal value of the domestic currency remains the same. c. The GDP Price Index and nominal value of the domestic currency remain the same. d. The GDP Price Index falls and nominal value of the domestic currency falls. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose that the central bank increases interest rates in an economy. How would this affect aggregate demand and inflation?
A) Aggregate demand would fall and inflation would rise. B) Aggregate demand would fall and inflation would fall. C) Aggregate demand would rise and inflation would rise. D) Aggregate demand would rise and inflation would fall.
A factor that might have contributed to the weakening of the U.S. economy in 2007-2009 was
A. increases by the Federal Reserve in its target short-term interest rate. B. the unexpected return to the gold standard. C. rapid growth of the money stock. D. rising levels of federal government spending.