An assumption of the intertemporal model that is often not met in low-income nations is:
A) that the economy is always at full employment.
B) that prices are flexible.
C) that a nation can borrow or lend any amount in international markets at the prevailing world real rate of interest.
D) that the government of the nation has a balanced budget.

Question

Quizplus · Accepted Answer

Low-income nations often face challenges in accessing international financial markets and may have limited options for borrowing or lending at favorable interest rates. This assumption of the intertemporal model may not always hold true in these situations, potentially impacting the accuracy of the model's predictions and policy recommendations.

An Assumption of the Intertemporal Model That Is Often Not