Figure 32-3 Refer to the Following Diagram of the Open-Economy Macroeconomic Model

question 21

Multiple Choice

Figure 32-3
Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow.
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Graph (a)
Graph (b) Graph (c) ​
-Refer to Figure 32-3. At an interest rate of 4 percent, the diagram indicates that

• A)there is a surplus in the market for foreign-currency exchange.
• B)national saving equals domestic investment.
• C)net capital outflow + domestic investment = national saving.
• D)in the market for foreign-currency exchange the quantity of dollars supplied equals the quantity of dollars demanded.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded in the market.

Quantity Demanded

The amount of a product that consumers are willing and able to purchase at a given price over a specified period.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.