Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the net nonreserve international borrowing/investing balanceand monetary base in the context of the Three-Sector-Model?
a. The net nonreserve international borrowing/investing
balance rises and monetary base rises.
b. The net nonreserve international borrowing/investing balance rises and monetary base falls.
c. The net nonreserve international borrowing/investing balance and monetary base fall.
d. The net nonreserve international borrowing/investing balance and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
.C
You might also like to view...
To eliminate a recessionary gap, the Fed can: a. increase the money supply as it will increase the interest rate and investment
b. increase the money supply as it will decrease the interest rate and increase investment. c. decrease the money supply as it will increase the interest rate and investment. d. decrease the money supply as it will decrease the interest rate and investment. e. decrease the money supply as it will increase the interest rate and decrease investment.
____ experience lower rates of unemployment than do ____
a. High school graduates; college graduates b. College graduates; high school graduates c. Adult females; adult males d. Black males; white males