Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and current international transactions become more positive (or less negative).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The quantity of real loanable funds per time period rises, and current international transactions become more negative (or less positive).
d. The quantity of real loanable funds per time period rises, and current international transactions remain the same.
e. The quantity of real loanable funds per time period and current international transactions remain the same.
.A
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For any country, if the world price of copper is lower than the domestic price of copper without trade, that country should
a. export copper. b. import copper. c. neither export nor import copper, since that country cannot gain from trade. d. neither export nor import copper, since that country already produces copper at a low cost compared to other countries.
Consumers of the exportable product in the exporting country are most likely to gain when trade is based on
A. increasing-cost industries. B. technological differences. C. external scale economies. D. different factor endowments.