Consider a small economy that does not permit international borrowing or lending. The country's autarky real interest rate is greater than the world real interest rate. Now suppose the economy removed capital controls. Which of the following is true? There is an excess supply of capital in the domestic economy and capital flows in There is an excess demand for capital in the domestic economy and capital flows out There is an excess demand for capital in the domestic economy and capital flows in There is an excess supply of capital in the domestic economy and capital flows out

Consider a small economy that does not permit international borrowing or lending. The country's autarky real interest rate is greater than the world real interest rate. Now suppose the economy removed capital controls. Which of the following is true? There is an excess supply of capital in the domestic economy and capital flows in There is an excess demand for capital in the domestic economy and capital flows out There is an excess demand for capital in the domestic economy and capital flows in There is an excess supply of capital in the domestic economy and capital flows out

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 1CQQ

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