In an economy with perfect capital mobility, if domestic interest rates are above world interest rates then
a. capital outflows will drive domestic interest rates down.
b. capital inflows will drive domestic interest rates down.
c. current account deficits will drive domestic interest rates down.
d. the central bank will have to intervene even if exchange rates are floating.
B
You might also like to view...
The Stackelberg model is more appropriate than the Cournot model in situations where
A) there are more than two firms. B) all firms enter the market simultaneously. C) one firm makes its output decision before the other. D) firms will be likely to collude.
A horizontal line has an infinite slope
a. True b. False Indicate whether the statement is true or false
During periods of high inflation, such as the 1979-1980 period, the existence of usury laws may cause
a. nominal rates of interest to be above real rates. b. negative nominal rates of interest. c. negative real rates of interest. d. real rates of interest to be above nominal rates.
Economists generally agree on the role the government should play in promoting productivity and economic growth
a. True b. False Indicate whether the statement is true or false