If a government started with a budget deficit and moved to a surplus, domestic investment
a. and the real exchange rate would rise.
b. and the real exchange rate would fall.
c. would rise and the real exchange rate would fall.
d. would fall and the real exchange rate would rise.
c
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In a reserve currency system (such as the Bretton Woods system or the European ERM), currencies peg to a reserve currency. As a result:
A) only the reserve currency country has monetary autonomy. B) all countries, other than the reserve currency country, have monetary autonomy. C) all countries have monetary autonomy. D) no country has monetary autonomy.
Which of the following statements is true about a simple circular flow model?
A) Producers are buyers in the factors market. B) Producers are neither buyers nor sellers in the product market. C) Households are neither buyers nor sellers in the input market. D) Households are sellers in the product market.