What happens to net capital outflow as the real interest rate falls? Explain your answer
As the real interest rate falls, domestic bonds become less attractive to both domestic and foreign residents and foreign bonds become more attractive. An increase in the purchase of foreign bonds by domestic residents and a decrease in the purchase of domestic bonds by foreign residents both increase net capital outflow.
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A research firm's findings concluded that the demand for movie tickets is price elastic in the afternoon but inelastic in the evenings. Given this information, to increase overall revenue the theatre owners should
a. Reduce the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows b. Increase the ticket prices for the afternoon shows and reduce the ticket prices for the evening shows c. Reduce the ticket prices for the afternoon shows and increase the ticket prices for the evening shows d. Increase the ticket prices for the afternoon shows and increase the ticket prices for the evening shows
Which of the following statements about trade deficits is FALSE?
A. Budget deficits tend to produce trade deficits. B. The U.S. has run a trade deficit for about 40 years. C. The U.S. trade deficit widened sharply in the1990s. D. A trade deficit makes it less likely that foreigners will make investments in a country.
The federal government began issuing inflation-indexed Treasury bonds in
A. 1913. B. 1989. C. 1997. D. 2001.
Assume that the Fed performs a foreign exchange intervention in which it does nothing except buy German government bonds. One result of this will be that:
A. both the dollar and the euro depreciate. B. the dollar appreciates and the euro depreciates. C. the euro depreciates. D. the dollar depreciates.