The yield curve is the relationship between the: a. Domestic ...

[Themember4]

The yield curve is the relationship between the:
 a. Domestic yield and foreign yield.
  b. Real yield (i.e., interest rate) and actual inflation.
  c. Nominal yield and time to maturity of a security.
  d. Nominal yield on corporate securities and the yield of government securities.
  e. Nominal yield and real yield of a security.

Question 2

Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. 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 current international transactions balance in the context of the Three-Sector-Model?
 a. The real risk-free interest rate rises and current international transactions balance becomes more positive (or less negative).
 b. The real risk-free interest rate rises and current international transactions balance becomes more negative (or less positive).
 c. The real risk-free interest rate and current international transactions balance remain the same.
 d. The real risk-free interest rate rises and current international transactions balance remains the same.
 e. There is not enough information to determine what happens to these two macroeconomic variables.

[abctaiwan]

Answer to Question 1

.C

Answer to Question 2

.A

[Themember4]

Thanks for the timely response, appreciate it

[xiaomengxian]

Excellent