Assume a country experiences heavy capital outflows. What is the first round effect on the real risk-free interest rate?
a. The change in the real risk-free interest rate is ambiguous.
b. The real risk-free interest rate rises.
c. The real risk-free interest rate falls.
d. The real risk-free interest rate is unaffected.
.B
You might also like to view...
During the Black Plague, capital became worthless. What can explain this?
A) Capital's marginal product fell because there was less labor. B) Capitalists died off at a greater rate than the workers. C) Capital's marginal product increased but the marginal product of labor decreased. D) Workers forgot how to use the capital.
The potential output of an economy is the level of output produced when the: a. real wage equals the nominal wage
b. price level is constant. c. expected real wage equals the nominal wage. d. seasonal unemployment rate is zero. e. expected price level equals the actual price level.
Based upon the equation of exchange, which of the following (ceteris paribus) is most likely to bring about inflation?
A) An increase in the money supply. B) A decrease in velocity. C) An increase in Real GDP. D) a and b E) a and c
What is the present value of $10,000 8 years from now if the interest rate is 8%?
What will be an ideal response?