Question
According to the open economy macroeconomic model, which of the following statements is (are) correct? (x) The usual effects of capital flight include a rightward
According to the open economy macroeconomic model, which of the following statements is (are) correct?
(x) The usual effects of capital flight include a rightward shift of demand in the loanable funds market and a rightward shift of the NCO curve,
(y) Capital flight typically causes a decrease in the domestic interest rate and an increase in NCO.
(z) Capital flight typically causes the real exchange rate of the domestic currency to depreciate because capital flight causes an increase in the supply of the currency in foreign currency exchange markets.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
According to the open-economy macro model, which of the following causes the real exchange rate of the United States dollar to depreciate?
(x) the United States government decreases the budget deficit
(y) the United States eliminates import quotas and tariffs.
(z) capital flight from the United States
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only
Step by Step Solution
There are 3 Steps involved in it
Step: 1
The detailed answer for the above question is provided below For the first set of questions Th...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started