Financial systems
Why is the financial system important for transferring funds from savers to borrowers in an economy?
It supports investment
How does an open macroeconomy benefit a country through international trade and capital flows?
Higher growth and investment
The average price of goods and services in the economy is also known as what?
The price level
Was developed by whom? (2person)
Robert mundell and Marcus Fleming
fixed exchange rate =floating exchange rate
false bro false
How can financial crises negatively effect economic growth and employment in a country?
Recession and unemployment
What can happen to a country's economy if imports become much larger than exports for a long period.
The real interest rate is greater than than the nominal interest rate in tht moment...
deflation occurs
The model integrates 3market equilibrium conditions into a unified framework. Count them?
Goods market
Money market
Balance of payments
Microeconomy learns individuals, households.
True
Under which exchange rates with perfect capital mobility, monetary policy is extremely effective at influencing output.
Floating
Rey argues the trilemma is effectively Dilemma-_______ and monetary autonomy are the real trade-off, as fixed pegs rarely hold indefinitely.
Capital mobility
The stated interest rate on a loan is the?
nominal interest rate
LM curve represents equilibrium where real money supply equals ______.
money demand
Frictional + Structural= natural rate of employment
false
Higher ratio indicate greater trade integration. Small eonomies typically exhibit ratios exceeding how much percent?
100%
Trade flows
Capital flows
Exchange rate exposure
Suppose th labor force stays constant, and the working-age popultion stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will?
Remain constant
The immossible trinity stats that a country cannot simultaniously achieve all three objectives. They are...?
Fixed exchange rate
Free capital mobility
Monetary Autonomy
there are 3ways of saving money in banks
false 2 ways they are current account and saving account
Reflect the degree to which capital moves freely across borders, including __________ ,portfolio flows and financial market access.
Foreign direct investment.
In an open economy, agg demand includes _______ and financial conditions depend on cross-border capital mobility.
net exports
Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would increase what?
The measured LFPR
The Mundell-Fleming framework remains the"______" of open-economy macroconomics, explaining why countris with floating rates rely on monetary policy for stabilization, while Eurozone members must use fiscal policy.
workhorse
In policy discussions, "open economy" implies that domestic policy cannot be designed in isoltion because external balance.
true