Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and current international transactions balance in the context of the Three-Sector-Model?
a. The GDP Price Index
falls and current international transactions balance becomes more positive (or less negative).
b. The GDP Price Index and current international transactions balance remain the same.
c. The GDP Price Index falls and current international transactions balance remains the same.
d. Real GDP falls and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Using the supply and demand curve for wheat above, sketch the supply and demand curves demonstrating the effect of an increase in disposable consumer incomes
How does each curve shift (if at all) to the increase in income? What does the shift do to equilibrium price and quantity?
Refer to the above figure. Profits for this firm are equal to zero
A) only for all points less than B. B) only at points B and C. C) for points between B and C. D) for all points less than B and greater than C.