Which of the following is correct concerning the open-economy macroeconomic mode
ID: 2440564 • Letter: W
Question
Which of the following is correct concerning the open-economy macroeconomic model?
The net-capital-outflow curve slopes upward.
The key determinant of net capital outflow is the real exchange rate.
The supply of dollars in the market for foreign-currency exchange is vertical.
None of the above is correct.
a.The net-capital-outflow curve slopes upward.
b.The key determinant of net capital outflow is the real exchange rate.
c.The supply of dollars in the market for foreign-currency exchange is vertical.
d.None of the above is correct.
Explanation / Answer
Right answer is (C)
The supply of dollar in the market for foreign currency exchange is vertical. Supply of dollar is not influenced by the change in exchange rate.
capital outflow curve always slopes downward.
Key determinant of net capital outflow is real interest rate. Real exchange rate is not key determinant of net capital outflow.
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