If Price Expectations Are Assumed to Be Correct,money Demand Is

question 112

Multiple Choice

If price expectations are assumed to be correct,money demand is proportional to income,and net capital flow is infinitely elastic,then the big,comprehensive model corresponds to which of the following special cases?

• A) classical closed economy
• B) classical open economy
• C) IS-LM model
• D) Mundell-Fleming with floating exchange rate

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Definitions:

Future Cash Flows

Estimates of the amount of money to be received or paid out in the future by an entity.

Negative NPVs

Instances where the Net Present Value (NPV) of a project or investment is below zero, indicating that the expected cash flows are not sufficient to cover the initial investment.

Shareholder Wealth

The overall value of an investment in a company held by its shareholders, often measured by stock price appreciation and dividends.

Average Return

The simple mathematical average of a series of returns generated over a period of time.