Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. There is not enough information to determine what happens to these two macroeconomic variables.
b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
c. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
d. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
e. Real GDP and net nonreserve-related international borrowing/lending remain the same.
.B
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When a developing country relies on import substitution,
a. it sacrifices the gains from specialization and comparative advantage b. replaces low-cost foreign goods with high-cost domestic goods c. domestic producers, shielded from foreign competition, usually fail to become efficient d. other countries often retaliate with their own trade restrictions e. All of the answers are correct
Which of the following is true?
a. The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. b. A new stock issue is often an excellent way for a firm to raise funds for future expansion. c. Changes in stock prices provide information about what investors think of various business decisions. d. All of the above are true.