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 quantity of real loanable funds per time period and reserves account in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises
and reserves account becomes more negative (or less positive).
b. The quantity of real loanable funds per time period falls and reserves account remains the same.
c. The quantity of real loanable funds per time period and reserves account remain the same.
d. The quantity of real loanable funds per time period rises and reserves account remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.A
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Milton Friedman attributed the Great Depression primarily to
A) the government's failure to respond to an increase in the budget deficit. B) a reduction in the money supply. C) economists' and policy-makers' failure to acknowledge their limited knowledge. D) the failure of wages to rise. E) inaccurate expectations by consumers and firms.
Three economic questions must be determined in all societies. What are they? a. How much will be produced? When will it be produced? How much will it cost?
b. What will the price of each good be? Who will produce each good? Who will consume each good? c. What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? d. What goods will be produced? How will goods be produced? Who will get the goods produced?