In a Two-Period SOE Model with Production, an Increase in the Capital

question 31

Multiple Choice

In a two-period SOE model with production, an increase in the capital stock

• A) can eliminate the current account deficit in the long run.
• B) increases domestic output and decreases consumption.
• C) decreases domestic output and increases the current account surplus.
• D) decreases domestic output and decreases the current account surplus.
• E) has no impact on domestic consumption.

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