A Large Country Imposes Capital Controls That Prohibit Foreign Borrowing

question 5

Multiple Choice

A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents.The country is currently running a financial account deficit.The imposition of the capital controls will cause

• A)net exports to increase.
• B)real domestic interest rates to rise.
• C)real world interest rates to fall.
• D)desired national saving to fall.

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Definitions:

Marginal Revenue Curve

Represents the additional income gained from selling one more unit of a product or service, crucial for determining optimal production levels in microeconomics.

Marginal Cost

The boost in aggregate costs that comes from generating one extra unit of a product or service.

Non-collusive Oligopolist

An oligopolistic market structure participant that competes without agreements or cooperation with rivals to influence market prices or output.

Marginal Revenue Curve

Represents the change in total revenue from selling one additional unit of a product or service.