Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility 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 falls, and current international transactions become more negative (or less positive).
b. The real risk-free interest rate rises, 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 remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Which of the following is true?
A) Much of the trade of the European Union (EU) countries is with EU countries. B) Industrialized countries tend to trade relatively little and largely with developing countries. C) Developing countries in Africa and South America tend to trade the most and largely with themselves. D) All of the above are true.
The earnings of most people
A) increase steadily until retirement. B) increase with age until around age 50 due to increased experience, training, and hours worked. C) increase with age until around age 40 due to increased experience and hours worked. D) increase with age until around age 60 due to increased experience, training, and hours worked, then level off as hours worked levels off.
The percent of population that experiences transient poverty at some point in their lives is:
A. more than 25 percent. B. less than 10 percent. C. approximately 12 percent. D. approximately 40 percent.
According to John Rawls, if people had to choose an income distribution without any knowledge of their own talents and abilities, they would likely prefer an income distribution that:
A. rewards hard work. B. rewards creativity. C. gives everyone an equal share. D. rewards innate intelligence