In the Open-Economy Macroeconomic Model,the Key Determinant of Net Capital

question 38

Multiple Choice

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

• A)nominal exchange rate.
• B)nominal interest rate.
• C)real exchange rate.
• D)real interest rate.

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Definitions:

Equity Method

An accounting method used to assess the investments made by a company in other companies, where the investment is significant but not controlling.

Cash Dividend

A payment made by a company to its shareholders, usually as a distribution of profits.

Net Income

The total profit or loss of a company after all revenues, expenses, and taxes have been accounted for, typically reported on an income statement.

Trading Securities

Financial securities that are purchased by a company not for long-term investment but rather for the purpose of selling them in the short term to generate profit.