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 quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and real GDP
falls.
b. The quantity of real loanable funds per time period falls and real GDP rises.
c. The quantity of real loanable funds per time period rises and real GDP remains the same.
d. The quantity of real loanable funds per time period and real GDP remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
You might also like to view...
Income equality has
A) decreased in the United States as manufacturing has increased. B) narrowed within countries but increased across countries. C) increased within countries but has narrowed across countries. D) not changed in the advanced economies over the past 50 years. E) increased in developing economies as manufacturing has decreased.
The long-run neutrality of money refers to the fact that in the long run, monetary policy
A) changes only real output. B) changes only the real interest rate. C) changes both real output and the real interest rate. D) has no effect on either real output or the real interest rate.
International trade may make some individuals in a nation better off, while other individuals are made worse off
a. True b. False Indicate whether the statement is true or false
Jenny sells lemonade in front of her house in the summer. Several other kids in Jenny's neighborhood also run lemonade stands in the summer. The lemonade market in Jenny's neighborhood is more likely to be perfectly competitive if:
A. each lemonade stand sells the same kind of lemonade. B. each stand tries to get more customers by offering different varieties of lemonade and snacks. C. some of the neighborhood parents build elaborate booths for their kids' stands while some kids sell from makeshift tables. D. all of the kids advertise heavily.