In a Model with Perfect Capital Mobility and Flexible Exchange

question 32

Multiple Choice

In a model with perfect capital mobility and flexible exchange rates, an increase in exports

• A)has no lasting effect on the equilibrium output level
• B)leads to an inflow of funds from abroad
• C)leads to a currency appreciation and an increase in imports
• D)temporarily increases domestic interest rates
• E)all of the above

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Definitions:

Bone

A rigid organ that forms part of the vertebrate skeleton, providing structural support to the body, protecting organs, anchoring muscles, and storing calcium.

Hyaline Cartilage

A type of connective tissue found in various parts of the body such as the nose, trachea, and larynx, characterized by its glossy, translucent appearance.

Tendons

Strong connective tissues that connect muscles to bones, transmitting the force that allows movement.

Ligaments

Strong, flexible fibers that connect bones to other bones at joints.