If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then
a. net capital outflow and the real exchange rate will rise.
b. net capital outflow will rise and the real exchange rate will fall.
c. net capital outflow will fall and the real exchange rate will rise.
d. net capital outflow and the exchange rate will fall.
b
You might also like to view...
If real GDP exceeds potential GDP, to move the economy to potential GDP the Fed
A) raises the federal funds rate to increase potential GDP but not real GDP. B) lowers the federal funds rate to decrease real GDP but not potential GDP. C) raises the federal funds rate to decrease real GDP but not potential GDP. D) lowers the federal funds rate to increase potential GDP but not real GDP. E) raises the federal funds rate to decrease both real GDP and potential GDP.
What is consumer surplus? Why would policy makers be interested in consumer surplus?
What will be an ideal response?