In a Model with Perfect Capital Mobility and Flexible Exchange

question 15

Multiple Choice

In a model with perfect capital mobility and flexible exchange rates, an increase in government purchases will

• A)increase net exports but decrease private domestic investment
• B)be totally crowded by a decrease in private domestic investment of the same magnitude
• C)crowd out net exports due to an exchange rate appreciation
• D)increase net exports due to a depreciation of the exchange rate
• E)increase consumption and net exports but decrease private domestic saving

---

Definitions:

Bond Dissociation Energies

The energy required to break a specific chemical bond in a molecule, indicating the bond's strength.

Carbon-bromine Bond

The covalent bond formed between a carbon atom and a bromine atom, often seen in organobromine compounds.

Methyl Carbon

A carbon atom bonded to a methyl group, -CH3, often involved in organic reactions.

Tertiary Carbon

A carbon atom bonded to three other carbon atoms, often described in the context of organic molecules and their reactivity.