Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and current international transactions become more positive (or less negative).
b. The real risk-free interest rate falls, and current international transactions become more negative (or less positive).
c. The real risk-free interest rate and current international transactions remain the same.
d. The real risk-free interest rate rises, and current international transactions become more negative (or less positive).
e. The real risk-free interest rate rises, and current international transactions remain the same.
.D
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According to Keynes, the marginal propensity to consume is constant when income increases
Indicate whether the statement is true or false
Which of the following adopted reforms that have substantially improved their economic freedom rating since 1980?
a. Ireland b. China c. New Zealand d. All of the above.
If a firm's total economic cost of producing 50,000 products is $5,000,000, and this output is sold for $5,000,000, we can conclude that the firm will earn an economic profit of:
a. $5,000,000 b. $0 c. $10,000,000 d. $50,000
A typical monopolistically competitive firm
A. sells a homogeneous product in the market. B. earns zero economic profits in the long run. C. sets the price of its product equal to its marginal cost of production. D. faces a perfectly elastic demand curve.