When expected future marginal product of capital increases in a small open economy with freeand the current account tocapital mobility, it causes investment tofall; riserise; fallfall; remain unchangedrise; remain unchanged

Introduction The extra production a business experiences after adding one unit of capital is known…

When expected future marginal product of capital increases in a small open economy with free capital mobility, it causes investment to and the current account to fall; rise rise; fall fall; remain unchanged rise: remain unchanged

When expected future marginal product of capital increases in a small open economy with free capital mobility, it causes investment to and the current account to fall; rise rise; fall fall; remain unchanged rise: remain unchanged

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 46P: Imagine that the economy of Germany finds itself in the following situation: the government budget...

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Question

When expected future marginal product of capital increases in a small open economy with free
and the current account to
capital mobility, it causes investment to
fall; rise
rise; fall
fall; remain unchanged
rise; remain unchanged

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In the open-economy IS-LM model, an increase in the domestic interest raterwill, other things equal, cause domestic investment to and the trade balance to O increase; increase decrease; increase increase; decrease O decrease; decrease
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