In an open economy with a given level of real interest rates and risk, a decrease in real interest rates abroad will ________ capital inflows and ________ the equilibrium domestic real interest rate.
A. decrease; increase
B. increase; decrease
C. decrease; decrease
D. increase; increase
Answer: B
You might also like to view...
For a natural monopoly, the marginal cost of producing an additional unit of its product is relatively small
Indicate whether the statement is true or false
Refer to the above graph. What combination would most likely cause a shift from AD 1 to AD 2?
a. An increase in taxes and no change in government spending b. A decrease in taxes and a decrease in government spending c. A decrease in taxes and an increase in government spending d. An increase in taxes and an increase in government spending
When real Gross Domestic Product (GDP) is below total planned real expenditures
A. a lower level of equilibrium real Gross Domestic Product (GDP) will occur. B. the circular flow will increase. C. a higher level of equilibrium real Gross Domestic Product (GDP) will occur. D. there will be unplanned increases in inventories.
Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. What is the desired level of investment spending in this economy if it is to achieve a noninflationary full-employment level of real GDP?
A. $50
B. $100
C. $150
D. $225