A U.S. federal budget deficit that raises real interest rates is most likely to:
a. lead to a depreciation of the dollar in the foreign exchange market.
b. encourage foreign investment in U.S. securities.
c. lead to an increase in exports.
d. lead to an appreciation of other currencies relative to the U.S. dollar.
e. discourage imports of foreign goods.
b
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If the expected gains on stocks rise, while the expected returns on bonds do not change, then
A) the demand curve for bonds will shift to the right. B) the supply curve for loanable funds will shift to the right. C) the equilibrium interest rate will fall. D) the equilibrium interest rate will rise.
How do transfer payments function as negative taxes?
If the budget deficit increases, then
a. an increase in the interest rate increases net capital outflow. b. an increase in the interest rate decreases net capital outflow. c. a decrease in the interest rate increases net capital outflow. d. a decrease in the interest rate decreases net capital outflow.
The convergence hypothesis states that international differences in real GDP per capita tend to _____ over time.
A. diverge B. fluctuate C. remain constant D. narrow