Which of the Following Is True of a Small Open

question 77

Multiple Choice

Which of the following is true of a small open economy,but not of a large open economy?

• A)Net exports are unlikely to be close to zero.
• B)The domestic real interest rate is equal to the world real interest rate.
• C)Changes in desired investment result in changes in the trade balance.
• D)Changes in desired investment result in changes in actual investment.
• E)none of the above

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Definitions:

Letter of Credit

A financial instrument issued by a bank guaranteeing a buyer's payment to a seller, subject to certain conditions.

Reimburse

To pay back or compensate someone for expenses they have incurred.

Fiscal Bank

An institution involved in governmental monetary and fiscal policies, often contributing to national economic management.

Sale of Beef

The commercial transaction or trade of beef between sellers and buyers, governed by food safety and trade regulations.