The domestic real interest rate (r) for a given country must be the same as the world real interest rate (rw) ________
A) if perfect capital mobility is assumed
B) because with no barriers to capital flows, if rw > r domestic residents would just borrow abroad putting upward pressures on the domestic rate until both rates equal each other
C) because with no barriers to capital flows, if rw < r domestic residents would only lend to foreigners putting downward pressures on the domestic rate until both rates equal each other
D) all of the above
E) none of the above
A
You might also like to view...
Keynes reasoned that consumer expenditure is most closely related to
A) the level of interest rates. B) the price level. C) disposable income. D) the marginal tax rate.
Other things the same, when the price level falls, interest rates
a. rise, which means consumers will want to spend more on homebuilding. b. rise, which means consumers will want to spend less on homebuilding. c. fall, which means consumers will want to spend more on homebuilding. d. fall, which means consumers will want to spend less on homebuilding.
One reason for diseconomies of scale is that, at very large scales, management systems can become
A) more efficient because they can effectively manage more workers. B) increasingly complex and inefficient. C) more numerous than the workers they manage. D) none of the above.
If the Fed wishes to increase the money supply, it can:
A. sell a bond to bank, and take the money it receives in exchange out of circulation in the economy. B. buy bonds from a bank, giving the bank cash in return, which it can then lend out. C. sell a bond to a bank, and take the money it receives and lend it out to someone else. D. buy a bond from a bank, requiring the bank to hold the money it receives as excess reserves.