Suppose a country experiences capital flight. Of the demand for loanable funds and the supply of currency in the market for foreign-currency exchange, which shifts right?
a. only the demand for loanable funds
b. only the supply of its currency in the market for foreign-currency exchange
c. both curves shift right
d. neither curve shifts right
c
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Mikey likes bagels, so he buys an old pizza shop for $150,000 and spends $10,000 installing new equipment which will allow him to make bagels instead of pizza. How will Mikey's recent purchases affect GDP?
A. Investment will increase $160,000. B. Investment will increase $150,000, and consumption will increase $10,000. C. Consumption will increase $150,000, and investment will increase $10,000. D. Investment will increase $10,000.
What role do almost all economists agree the central bank has in a financial crisis?
A. Lender of last resort B. Expansionary fiscal policy to reduce herding C. No role D. Contractionary fiscal policy to reduce leverage