Germany Inc refers to:
a. the use of corporations to produce output
b. the close relationship between government and business
c. raising capital through stock markets
d. interlocking directorates and cross holdings
e. none of the above
Question 2
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
b. There is not enough information to determine what happens to these two macroeconomic variables.
c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative).
d. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending remains the same.
e. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive).
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