Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. 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 net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
d. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.B
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Approximately two decades after a "baby boom," one could expect: a. production to change from an interior point to a point along the production possibilities curve. b. a movement along the production possibilities curve from one point to another
c. an outward shift of the production possibilities curve along both axes. d. an inward shift of the production possibilities curve.
According to the signaling view, education
a. has no effect on lifetime earnings. b. alters work ethic. c. enhances productivity. d. is an indicator of natural ability.
Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day.Number of Cakes Per DayTotal Cost Per Day0$1001$1802$2203$3004$4005$5206$660 If Sarah's fixed costs double, then in the short run, her profit-maximizing level of output:
A. will shrink to zero if she starts earning a loss. B. will increase. C. will not change. D. will decrease.
When buyers and sellers are not equally informed about the characteristics of the goods and services offered for sale, information is said to be:
A. symmetric. B. costly-to-fake. C. credible. D. asymmetric.