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 real risk-free interest rate and net nonreserve international borrowing/investing in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises and net nonreserve international borrowing/investing becomes more positive (or less negative).
b. The real risk-free interest rate falls and net nonreserve international borrowing/investing becomes more negative (or less positive).
c. The real risk-free interest rate rises and net nonreserve international borrowing/investing becomes more negative (or less positive).
d. The real risk-free interest rate and net nonreserve international borrowing/investing 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) Real and nominal values are not related. B) Real standards of living can increase without any positive economic growth. C) Real standards of living decrease with positive economic growth. D) Real growth rates fail to account for by price level changes.
Indirect taxes are levied on
a. spending b. saving c. income d. wealth e. none of the above
Assume both the demand for bagels and the supply of bagels increase. Which of the following outcomes is certain to occur?
A. The equilibrium quantity of bagels will rise. B. The equilibrium quantity of bagels will fall. C. The equilibrium price of bagels will fall. D. The equilibrium price of bagels will rise.
If cyclical unemployment is 4%, the overall unemployment rate
A. is 4%. B. is more than 4%. C. is 9%. D. is more than 9%.