Which of the Following Is Correct Concerning the Open-Economy Macroeconomic

question 33

Multiple Choice

Which of the following is correct concerning the open-economy macroeconomic model?

• 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.

---

Definitions:

Edgeworth Box

A diagram used in economics to show the distribution of resources and the potential gains from trade between two individuals in a pure exchange economy.

Contract Curve

The contract curve represents a set of efficient allocations in the Edgeworth Box, where no participant could be made better off without making another participant worse off.

Pareto Optimal

A condition or situation in which it is impossible to make one party better off without making another party worse off, reflecting an optimal distribution of resources.

Initial Endowment

In economic theory, refers to the initial quantities of various assets or goods that an individual or entity possesses.