The agency most responsible for Japan's industrial policy:
a. MITI
b. The central bank
c. The finance ministry
d. The prime minister
e. The emperor
Question 2
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. 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 real GDP in the context of the Three-Sector-Model?
a. The nominal exchange rate remains the same and monetary base rises.
b. The nominal exchange rate remains the same and monetary base falls.
c. The nominal exchange rate and monetary base fall.
d. The nominal exchange rate and monetary base remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.
