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Author Question: A nation's country-risk premium increases if: a. Central bank policies become more predictable. b. ... (Read 70 times)

daltonest1984

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  • Posts: 536
on: Jun 30, 2018
A nation's country-risk premium increases if:
 a. Central bank policies become more predictable.
  b. Expected inflation becomes harder to predict.
  c. Its government becomes more stable.
  d. All of the above.
  e. None of the above

Question 2

Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium.
 a. The real risk-free interest rate rises and GDP Price Index rises.
  b. The real risk-free interest rate falls and GDP Price Index falls.
  c. The real risk-free interest rate rises and GDP Price Index falls.
  d. The real risk-free interest rate and GDP Price Index remain the same.
  e. There is not enough information to determine what happens to these two macroeconomic variables.


epscape

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  • Posts: 335
Reply #1 on: Jun 30, 2018
Answer to Question 1

.B

Answer to Question 2

.D


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