a. The major economic functions of the interest rate are O to provide market incentives for saving and to encourage international capital flows. O to influence investment and domestic output and to provide market incentives for saving. O to provide market incentives for saving and to allocate money capital to its most productive uses. O to influence investment and domestic output and to allocate money capital to its most productive uses.

Question 8 of 20 Current account transactions are records of the incomes and expenditures from exports and imports, plus international financial investments and borrowing. O a. True O b. False home + ) O Icon Key R 5 B 6 Y H & 7 N * 8 M ( 9 K O L P

31. The __________ exchange rate is a weighted average of the market rates across a number of foreign currencies. a. Nominal bilateral b. Real bilateral c. Nominal effective d. Real effective 32. The __________ exchange rate incorporates both the market exchange rate and the product price levels for two countries. a. Nominal bilateral b. Real bilateral c. Nominal effective d. Real effective 33. The __________ exchange rate is a weighted average of the real bilateral exchange rates across a number of foreign countries. a. Nominal bilateral b. Real unilateral c. Nominal effective d. Real effective 34. Studies of exchange rate prediction models conclude that: a. Structural economic models cannot reliably out predict the naïve alternative of a random walk for short forecast horizons. b. Structural economic models reliably out predict the naïve alternative of a random walk for short forecast horizons. c. Structural economic models cannot out predict the…

.  The government has proposed Rs1,289 billion for the defence budget for the year 2020-21, 5.1% more compared to last year’s revised defence estimates of Rs1,227 billion for the year 2019-20. If Government cut defence Budget, what happens to saving, investment, the trade balance, the interest rate, inflation rate and the exchange rate? And similarly, Government decreases the interest rate due to COVID-19 so explain what impact on consumption, investment and interest rate. Justify the answer with your own word and examples.