In a Large Open Economy, If Political Instability Abroad Lowers

question 71

Multiple Choice

In a large open economy, if political instability abroad lowers the net capital outflow function, then the real interest rate:

• A) rises, while the real exchange rate rises and net exports fall.
• B) rises, while the real exchange rate falls and net exports rise.
• C) falls, while the real exchange rate rises and net exports rise.
• D) falls, while the real exchange rate rises and net exports fall.

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Definitions:

Timely Inventory Control

The practice of managing and optimizing stock levels to meet demand without incurring excess or shortage, ideally in a timely manner.

Efficient Production Planning

A process that ensures resources are used effectively to meet production goals, minimizing waste and costs while maximizing output.

Financial Ratios

Quantitative measures derived from financial statements that are used to evaluate a company's financial health, performance, and viability.

Breakeven Quantity

The number of units that must be sold at a given price to cover all associated costs, resulting in neither profit nor loss.