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 real GDP and the monetary base in the context of the Three-Sector-Model?
a. Real GDP rises and monetary base rises.
b. Real GDP rises and monetary base falls.
c. Real GDP and monetary base fall.
d. Real GDP and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 2 - The Four Tigers include
a. Hong Kong and Singapore
b. Japan and Malaysia
c. China and Japan
d. South Korea and Taiwan
e. Both a and d are correct
Question 3 - Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to remain the same and monetary base to remain the same.
b. Demand for real goods and services to remain the same and M2 money supply to fall.
c. Demand for real goods and services to rise and M2 money multiplier to remain the same.
d. Demand for real goods and services to rise and M2 money supply to rise.
Question 4 - Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions balance in the context of the Three-Sector-Model?
a. Real GDP falls and current international transactions balance becomes more negative (or less positive).
b. Real GDP rises and current international transactions balance becomes more negative (or less positive).
c. Real GDP and current international transactions balance remain the same.
d. Real GDP 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 5 - The country known for its use of industrial policy
a. the United States
b. Japan
c. Hong Kong
d. Singapore
e. All of the above
Question 6 - Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to rise and monetary base to remain the same.
b. Demand for real goods and services to fall and M2 money supply to fall.
c. Demand for real goods and services to remain the same and M2 money multiplier to fall.
d. Demand for real goods and services to remain the same and M2 money supply to remain the same.
Quick Reply
