What impact do savings rates in Belgium have on the real interest rate that businesses in Belgium must pay to obtain the funds to finance their spending on plant and equipment?
What will be an ideal response?
Because Belgium is a small open economy, the domestic real interest rate will equal the world real interest rate. Because domestic saving in Belgium has no effect on the world real interest rate, the savings rate in Belgium has no impact on the real interest rate at which businesses in Belgium are able to borrow funds.
You might also like to view...
When external costs are present and the government imposes a tax equal to the marginal external cost, then
A) efficiency can be achieved. B) transaction costs will be high. C) the marginal benefit of the external cost will fall. D) property rights must have already been established.
A mismatch of the skills of unemployed workers and the skills required for existing jobs is defined as:
a. involuntary unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.
In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the community indifference curves of Canada. In the absence of trade Canada will:
A. produce at point S1 and consume at point C0. B. produce at point S1 and consume at point C1. C. produce and consume at point C0. D. produce and consume at point S1.
The International Bank for Reconstruction and Development (IBRD) part of the World Bank is set up to lend to whom and for what types of projects?
What will be an ideal response?