The FE curve has a
A. positive slope because a decrease in domestic interest rates leads to capital outflows causing a surplus in the official settlements balance. An increase in output levels is thus needed to reduce that surplus.
B. negative slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the official settlements balance. A decrease in output levels is thus needed to reduce that surplus.
C. negative slope because an increase in domestic interest rates leads to capital outflows causing a deficit in the financial account balance. An increase in output levels is thus needed to reduce that deficit.
D. positive slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the financial account balance. An increase in output levels is thus needed to reduce that surplus.
Answer: D
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In a persisting demand-pull inflation
A) aggregate demand increases and potential GDP decreases. B) aggregate demand decreases and aggregate supply decreases. C) aggregate supply decreases and aggregate demand increases. D) aggregate supply increases and aggregate demand increases. E) None of the above answers is correct.
The aggregate supply curve is:
A. the relationship between the overall price level and total production by firms. B. downward-sloping. C. the sum total of the production of all the firms in the economy for every given demand level. D. the sum total of the production of all the firms in the economy for every level of profit.
Diminishing returns set in when a firm increases its labor and capital at the same time
Indicate whether the statement is true or false
Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%. This action would
A. decrease money demand, shifting the LM curve up and to the left. B. increase money demand, shifting the LM curve down and to the right. C. decrease money demand, shifting the LM curve down and to the right. D. increase money demand, shifting the LM curve up and to the left.