In the Open-Economy Macroeconomic Model,the Key Determinant of Net Capital

question 38

Multiple Choice

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

• A)nominal exchange rate.
• B)nominal interest rate.
• C)real exchange rate.
• D)real interest rate.

---

Definitions:

Capital Markets

Financial markets where debt or equity securities are traded, providing a mechanism for companies to raise long-term funds and investors to purchase securities.

Money Market Securities

Short-term financial instruments typically with high liquidity and minimal risk.

Capital Market Securities

Long-term financial instruments traded in capital markets, such as bonds, stocks, or debentures.

Liquid

Describes an asset that can be quickly converted into cash without significant loss of value or a market where such assets can be bought or sold with ease.