In a Short-Run Model of a Large Open Economy with a Floating

question 15

Multiple Choice

In a short-run model of a large open economy with a floating exchange rate, net capital outflow ______ as the domestic interest rate increases and is just equal to ______.

• A) decreases; the increase in net exports.
• B) decreases; the decrease in net exports.
• C) increases; the increase in net exports.
• D) increases; the decrease in net exports.

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Definitions:

Circular Runout

A term in mechanical engineering that describes the tolerance of how much one circular element of a part can deviate from a perfect circle as it rotates.

Cross Section

A diagram or representation showing the internal structure of something when cut along an imaginary line.

Circular Runout

A tolerance that limits the total variation a surface can have when rotated around a central axis, ensuring roundness and smooth operation of rotating parts.

Total Runout

A composite tolerance applied to a feature which controls both its form and its orientation to a datum axis.