In the Open-Economy Macroeconomic Model, Which of the Following Would

question 182

Multiple Choice

In the open-economy macroeconomic model, which of the following would make Mexico's net capital outflow decrease?

• A)a decrease in Canadian interest rates
• B)a decrease in Mexican interest rates
• C)an appreciation of the Mexican peso
• D)an increase in Mexico's net exports

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Definitions:

Corner Solution

Situation in which the marginal rate of substitution of one good for another in a chosen market basket is not equal to the slope of the budget line.

MRS (Marginal Rate Of Substitution)

The rate at which a consumer is willing to substitute one good for another while maintaining the same level of satisfaction.

MRT (Marginal Rate Of Transformation)

The rate at which goods or services can be transformed into other goods or services, reflecting the opportunity cost of shifting resources in production.

Marginal Rates

The additional or incremental tax rate applied to every additional dollar of income.