Perfect capital mobility implies
A. an FE curve that is horizontal.
B. high domestic interest rates relative to foreign interest rates.
C. a vertical FE curve.
D. an FE curve that is steeper than the LM curve.
Answer: A
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If the real interest rate
A) falls, there is a movement along the supply curve of loanable funds to a lower quantity of loanable funds . B) rises, the supply of loanable funds curve shifts leftward. C) rises, the supply of loanable funds curve shifts rightward. D) falls, there is a movement along the supply of loanable funds curve to a higher quantity of saving. E) falls, the supply of loanable funds curve shifts leftward.
A tariff will benefit
A) domestic producers by maintaining a higher than free-trade price. B) foreign producers by allowing them to sell at a higher price in markets with tariffs. C) consumers who are able to better afford domestically produced goods. D) All of the above answers are correct.
To exercise the law of comparative advantage, a nation
a. must produce some goods using fewer resources than its trading partner. b. does not have to produce any goods using fewer resources than its trading partner. c. must produce some goods on an equal footing with its trading partner. d. must show a lower absolute cost of production than its trading partner.
One result of voters' rational ignorance is that
a. cyclical majorities are more common b. vote trading is common c. majority rules d. special interests often dominate legislation e. members of Congress go along with whatever their constituents want