Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model?
a. Real GDP rises and net nonreserve international

borrowing/lending balance becomes more positive (or less negative).
b. Real GDP rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive).
c. Real GDP falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative).
d. Real GDP and net nonreserve international borrowing/lending balance remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.

.A