If supply is upward-sloping and demand is downward sloping, what happens to the equilibrium real risk-free interest rate and quantity of real loanable funds per time period if there is a decrease of financial international capital flows into a nation:
a. The real risk-free interest rate rises and the quantity per time period falls.
b. The real risk-free interest rate rises and the quantity per time period rises.
c. The real risk-free interest rate falls and the quantity per time period falls.
d. The real risk-free interest rate rises and the quantity per time period does not change.
e. The real risk-free interest rate rises and the quantity per time period is uncertain.
Question 2 - 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 quantity of real loanable funds per time period and current international transactions balance in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and current international transactions balance becomes more positive (or less negative).
b. The quantity of real loanable funds per time period rises and current international transactions balance becomes more negative (or less positive).
c. The quantity of real loanable funds per time period and current international transactions balance remain the same.
d. The quantity of real loanable funds per time period rises and current international transactions balance remains the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 3 - The creation of the European Union is an example of Hayek's:
a. Human action
b. Human design
c. Spontaneous disorder
d. None of the above
Quick Reply
