Author Question: Assume a country experiences heavy capital outflows. What is the first round effect on the value of ... (Read 36 times)

craiczarry · **on:** Jun 30, 2018

Assume a country experiences heavy capital outflows. What is the first round effect on the value of the domestic currency?
a. The value of the currency rises.
b. The value of the currency is unaffected.
c. The value of the currency falls.
d. The change in the value of the currency is ambiguous.

Question 2

Virtual currency unit 3 (VCU3) is different from VCU2 because:
a. VCU2 cannot be spent in the real world; VCU3 can be spent in the real world.
b. In terms of convertibility, there is no difference; both VCU2 and VCU3 can be purchased with and sold for legal tender.
c. VCU3 can directly affect real world demand, whereas VCU2 cannot affect real-world demand.
d. In terms of their potential to change a nation's monetary base, there is no difference because neither VCU3 nor VCU2 affect a nation's monetary base.