Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the net nonreserve international borrowing/investing balanceand monetary base in the context of the Three-Sector-Model?
a. The net nonreserve international borrowing/investing
balance rises and monetary base rises.
b. The net nonreserve international borrowing/investing balance rises and monetary base falls.
c. The net nonreserve international borrowing/investing balance and monetary base fall.
d. The net nonreserve international borrowing/investing balance and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
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The above figures show the market for HD televisions. If the technology used to produce these televisions advances so that productivity increases, which figure shows the effect of this change?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the figures represent this change.
When Italy buys Boeing jets, the price Italy pays is ________ if it produced its own jets, and the price Boeing receives is ________ than it could receive from an additional U.S. buyer
A) lower than; higher B) higher than; higher C) the same as; higher D) lower than; lower E) higher than; lower
All of the following describe the market for credit default swaps on mortgage-backed securities in the mid-2000s EXCEPT
A) an increasing number of buyers were speculators. B) AIG apparently underestimated the risk involved with mortgage-backed securities. C) the volume of credit default swaps was too low making it difficult to assess their value. D) payments by buyers were too low relative to risk.
Calculate t-statistics for each variable and explain what this tells you
What will be an ideal response?