Figure 32-5 Refer to This Diagram of the Open-Economy Macroeconomic Model to Model

question 136

Multiple Choice

Figure 32-5
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.

-Refer to Figure 32-5.In the market for foreign-currency exchange,the effects of an increase in the budget surplus can be illustrated as a move from j to

• A)g.
• B)h.
• C)i.
• D)k.

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Definitions:

Capital Flows

The transfer of funds to support trade, investment, or business activities, domestically or across borders.

Short-run Profits

The profit earned by a firm during a period where at least one input is fixed, typically analyzed to understand performance without long-term adjustments.

Capital Flow

The movement of money for the purpose of investment, trade, or business production across international borders.

Industry's Short-run

A period in which at least one of a firm's inputs is fixed, limiting the firm's ability to adjust to changes in market demand.