In the Open-Economy Macroeconomic Model,other Things the Same,which of the Following

question 5

Multiple Choice

In the open-economy macroeconomic model,other things the same,which of the following both make the exchange rate fall?

• A)U.S.investment demand falls and foreign demand for U.S.goods falls
• B)U.S.investment demand falls and foreign demand for U.S.goods rises
• C)U.S.investment demand rises and foreign demand for U.S.goods falls
• D)U.S.investment demand rises and foreign demand for U.S.goods rises

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Definitions:

Discount Rate

The rate applied in DCF assessment to compute the present worth of imminent cash flows.

Internal Rate

Short for Internal Rate of Return (IRR), a financial metric used to estimate the profitability of potential investments by calculating the rate of return at which net present value of all cash flows (both positive and negative) from a project equals zero.

Profitability Index

A capital budgeting tool that measures the ratio of the present value of future cash flows from an investment to the investment's initial cost.

Mutually Exclusive

Situations or events that cannot both occur at the same time.