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 real GDP and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model?
a. Real GDP rises and net nonreserve international
borrowing/lending balance becomes more positive (or less negative).
b. Real GDP rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. Real GDP falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. Real GDP and net nonreserve international borrowing/lending balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
For a competitive buyer, the marginal expenditure per unit of an input
A) exceeds the average expenditure per unit. B) is less than the average expenditure per unit. C) equals the average expenditure per unit. D) any of the above could be true.
A typical behavior that violates the assumption of rational behavior is:
A. saying you want to lose weight, but ordering dessert. B. being willing to pay more for something if you use a credit card than if you use cash. C. stubbornly watching to the end of a movie you've decided you're not enjoying at all. D. All of these demonstrate irrational behavior.
Do economists know the value of the MPC for most economies?
A. Yes, with a high level of precision. B. Yes, with a certainty level of four decimal places. C. No, it is impossible to determine a national MPC. D. Yes, but with some level of uncertainty.
Given the strict quantity theory of money, if the quantity of money were decreased by 50 percent, prices would:
A. fall by 50 percent. B. rise by 50 percent. C. increase by 100 percent. D. decrease by 100 percent.