Assume that the central bank increases the reserve requirement. 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 negative (or less positive).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The real risk-free interest rate rises, and current international transactions become more positive (or less negative).
d. The real risk-free interest rate and current international transactions remain the same.
e. The real risk-free interest rate falls, and current international transactions become more negative (or less positive).
.A
You might also like to view...
A rise in confidence is associated with higher consumption and investment demand, and leads to:
a. a downward shift in the AD curve. b. an inward shift in the AD curve. c. an outward shift in the AD curve. d. an upward shift in the AD curve.
Recalling some historical detail of the chapter, the rapid growth of Boeing was primarily due to
a. competitive pricing policies b. strong advertising campaigns c. a horizontal merger with McDonnell Douglas d. a vertical merger with McDonnell Douglas e. a conglomerate merger with McDonnell Douglas
In the United States, all ozone-depleting substances were phased out by 2005 with the exception of
a. CFCs b. halons c. methyl bromide d. HCFCs e. none of the above
In an economy where firms in most industries are purely competitive firms, individual firms in each industry would produce ________ products and have a ________ share of industry output.
A. differentiated; large B. differentiated; small C. standardized; small D. standardized; large