Author Question: The main objective of financial liberalization is ________. A) to encourage financial innovation ... (Read 119 times)

renzo156

  • Hero Member
  • *****
  • Posts: 526
The main objective of financial liberalization is ________.
 
  A) to encourage financial innovation
  B) to improve the allocation of financial capital
  C) to discourage volatility in financial markets
  D) to reduce the likelihood of a credit boom

Question 2

China is a large open economy with an extraordinarily high saving rate.
 
  If, as seems likely, there is a decrease in desired saving in the coming years, what effects should we expect to see on China's trade balance (net capital flow), domestic real interest rate, and actual levels of saving and investment?



janeli

  • Sr. Member
  • ****
  • Posts: 346
Answer to Question 1

B

Answer to Question 2

A decrease in desired saving leads to a decrease in the trade balance (net capital outflow), and an increase in the domestic real interest rate. The higher interest rate will prevent actual saving from falling as much as it would otherwise, but actual saving does decline. The higher interest rate causes actual investment to decline, reducing the size of the decline in the trade balance (net capital outflow).



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Looking at the sun may not only cause headache and distort your vision temporarily, but it can also cause permanent eye damage. Any exposure to sunlight adds to the cumulative effects of ultraviolet (UV) radiation on your eyes. UV exposure has been linked to eye disorders such as macular degeneration, solar retinitis, and corneal dystrophies.

Did you know?

The tallest man ever known was Robert Wadlow, an American, who reached the height of 8 feet 11 inches. He died at age 26 years from an infection caused by the immense weight of his body (491 pounds) and the stress on his leg bones and muscles.

Did you know?

Asthma attacks and symptoms usually get started by specific triggers (such as viruses, allergies, gases, and air particles). You should talk to your doctor about these triggers and find ways to avoid or get rid of them.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

For a complete list of videos, visit our video library