If the euro per dollar exchange rate changes from $1 = 0.8 euros to $1 = 0.7 euros, it implies that the euro has depreciated against the dollar

An increase in a small open economy's government budget deficit that reduces national saving and the current account balance causes an

A) increase in desired saving. B) increase in the world real interest rate. C) increase in exports. D) increase in absorption.

Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium

a. The real risk-free interest rate falls and reserve-related (central bank) transactions becomes more negative (or less positive). b. The real risk-free interest rate remains the same and reserve-related (central bank) transactions becomes more negative (or less positive). c. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate rises and reserve-related (central bank) transactions remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.