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 quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. The GDP Price Index rises, and nominal value of the domestic currency falls.
c. The GDP Price Index rises, and nominal value of the domestic currency rises.
d. The GDP Price Index falls, and nominal value of the domestic currency rises.
e. The GDP Price Index rises, and nominal value of the domestic currency remains the same.
.C
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Which markets are depicted in the basic circular flow model?
A) the factor market and the bond market B) the stock market and the bond market C) the money market and the foreign exchange market D) the goods market and the stock market E) the goods market and the factor market
Briefly explain how a U.S. company that exports to Europe can hedge against exchange rate risk
What will be an ideal response?
The federal taxes owed by a taxpayer depend
a. only upon the marginal tax rate on the taxpayer's first $25,000 of income. b. only upon the marginal tax rate on the taxpayer's last $10,000 of income. c. upon all the marginal tax rates up to the taxpayer's overall level of income. d. upon all the marginal tax rates, including those for income levels that exceed the taxpayer's overall level of income.
In the ________________ of externalities, the market equilibrium is ______________ efficient because it maximizes the net social benefit.
a. absence; ecologically b. presence; ecologically c. absence; economically d. presence; economically e. absence; environmentally