Country A's real interest rate is 4% and Country B's real interest rate is 7%. If...
Country A's real interest rate is 4% and Country B's real interest rate is 7%. If Country A increases their real interest rate to 8%, Country B residents buy ____________ Country A assets and Country A's net capital outflow _____________.
A. less; increases
B. more; increases
C. more; decreases
D. less; decreases
Homework Answers
Answer: (D) less; decreases
Real interest rate in country A is more than that in country B. So, B’s residents will prefer to buy more from their own country. So they now buy less country A assets.
Net capital outflow of a country is proportional to its exports. As B residents buy less from A, so A’s export has decreased and so it’s net capital outflow decreases.
Add Answer to:
Country A's real interest rate is 4% and Country B's real
interest rate is 7%. If...
If country A's currency strengthens against country B's currency, what will be the most likely effect...
If country A's currency strengthens against country B's currency, what will be the most likely effect on trade between the country A and B? Country A will import less from country B. Country A will import more from country B. Country B will export less to country A. Country B will import more from country A.
If we know the exchange rate between Country A's currency and Country B's currency and we...
If we know the exchange rate between Country A's currency and Country B's currency and we know the exchange rate between Country B's currency and Country C's currency, then we can compute the exchange rate between Country A's currency and Country C's currency. a. Suppose the exchange rate between the Japanese yen and the Canadian dollar is currently ¥106 = $1 and the exchange rate between the British pound and the Canadian dollar is £0.66 = $1. b. Suppose the...
Amount Transaction Transaction (Year 2017) number 1 Interest paid by a Country B's corporation on a...
Amount Transaction Transaction (Year 2017) number 1 Interest paid by a Country B's corporation on a bond owned by a Country A's bank $1000 S2000 Interest paid by Country A's government on a treasury bills owned by Country C's government $3000 54°000 3 Country A imports of coffee from Country B Country A's citizen donation to a Non-Governmental Organization located in Country A 5 Country A's sale of Country C's government bonds $5*000 6 Country B's export of raw materials...
Need help with this question, thanks in advance. Which of the following is the effect of...
Need help with this question, thanks in advance. Which of the following is the effect of a decrease in the world interest rate? a. Foreigners buy more Canadian assets, which increases Canadian net capital outflow. b. Foreigners buy more Canadian assets, which reduces Canadian net capital outflow. c. Canadians buy more foreign assets, which reduces Canadian net capital outflow. d.Canadians buy more foreign assets, which increases Canadian net capital outflow.
8. In a small open economy, if the world real interest rate is above the rate...
8. In a small open economy, if the world real interest rate is above the rate at which national saving exceeds domestic investment, then there will be a trade _and net capital outflow. A) surplus; negative B) deficit; positive C) surplus, positive D) deficit; negative
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate...
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate increases which of the following? a. national saving and domestic investment b. national saving and the net capital outflow c. domestic investment and the net capital outflow d. national saving only 2. An appreciation of a nation's currency can be the result of which of the following? a. an increase in net exports b. a decrease in net exports c. a fall in national...
5 In the intertemporal model, the real interest rate increases, the following statement is wrong ()...
5 In the intertemporal model, the real interest rate increases, the following statement is wrong () A budget constraint line is steeper B Consumer endowment points change C. The present value of the consumer ’s lifetime wealth decreases D consumers will increase current consumption 6 In the intertemporal model, the effect of increasing real interest rates on lenders is () A Current consumption increases, future consumption increases B. Current consumption decreases, future consumption increases C Current consumption is uncertain, and...
10. The real interest rate is the (x) real rate of return to the lender. (y)...
10. The real interest rate is the (x) real rate of return to the lender. (y) real cost of borrowing to the borrower. (z) nominal interest rate plus the rate of inflation. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (z) only 13. If there is a shortage of loanable funds, then A. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity...
When drawn against the real interest rate, the output demand curve shifts to the right when...
When drawn against the real interest rate, the output demand curve shifts to the right when Question 15 options: 1) current capital stock decreases. 2) current capital stock increases. 3) real wage rate decreases. 4) real wage rate increases. 5) current capital stock and real wage rate increases.
if a country has business opportunities that become relatively attractive to other countries what best predicts...
if
a country has business opportunities that become relatively
attractive to other countries what best predicts the effect of this
change
If a country has business opportunities that become relatively attractive to other countries, what best predicts the effects of this change? O a. Both net exports and net capital outflow decrease. 10 b. Net exports increase, but net capital outflow decreases. O c. Net exports decrease, but net capital outflow increases. O d. Both net exports and net capital...
If we know the exchange rate between Country A's currency and Country B's currency and we know the exchange rate between Country B's currency and Country C's currency, then we can compute the exchange rate between Country A's currency and Country C's currency. a. Suppose the exchange rate between the Japanese yen and the Canadian dollar is currently ¥106 = $1 and the exchange rate between the British pound and the Canadian dollar is £0.66 = $1. b. Suppose the...
Amount Transaction Transaction (Year 2017) number 1 Interest paid by a Country B's corporation on a bond owned by a Country A's bank $1000 S2000 Interest paid by Country A's government on a treasury bills owned by Country C's government $3000 54°000 3 Country A imports of coffee from Country B Country A's citizen donation to a Non-Governmental Organization located in Country A 5 Country A's sale of Country C's government bonds $5*000 6 Country B's export of raw materials...
8. In a small open economy, if the world real interest rate is above the rate at which national saving exceeds domestic investment, then there will be a trade _and net capital outflow. A) surplus; negative B) deficit; positive C) surplus, positive D) deficit; negative
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate increases which of the following? a. national saving and domestic investment b. national saving and the net capital outflow c. domestic investment and the net capital outflow d. national saving only 2. An appreciation of a nation's currency can be the result of which of the following? a. an increase in net exports b. a decrease in net exports c. a fall in national...
if
a country has business opportunities that become relatively
attractive to other countries what best predicts the effect of this
change
If a country has business opportunities that become relatively attractive to other countries, what best predicts the effects of this change? O a. Both net exports and net capital outflow decrease. 10 b. Net exports increase, but net capital outflow decreases. O c. Net exports decrease, but net capital outflow increases. O d. Both net exports and net capital...
Most questions answered within 3 hours.
-
Does direct Medicare reimbursement of Advanced practice nurses
increase access to their services?
asked 7 minutes ago -
List and explain why a company would choose to use a
published
compensation survey vs. creating...
asked 18 minutes ago -
A discrete random variable X can take values from 1 to 10. Find
the variance of...
asked 31 minutes ago -
The primary financial goal of a corporation is to maximize:
shareholders wealth.
earnings per share.
stock...
asked 38 minutes ago -
determine whether the vectors u=(1,2,3,), v=(-2,1,0) and
w=(1,0,1) are linearly dependent or independent.
asked 44 minutes ago -
python
Define a function called print_values which takes a dictionary
object as a parameter. The function...
asked 1 hour ago -
In Chapter 1 you created a program named Triangle in
which you displayed a seven-line triangle...
asked 1 hour ago -
Research question: What are the differences between separately
stated and non separately stated transactions in an...
asked 2 hours ago -
By using Arduino write a code that connects two LEDs to two
push-buttons. Each button controls...
asked 3 hours ago -
Bank of America has bonds that pay a coupon interest rate of 5.5
percent and mature...
asked 3 hours ago -
Problem: Patient Fees C++
You are to write a program that computes a patient’s bill for...
asked 5 hours ago -
In a population of interest, we know that, 77% drink coffee, and
23% drink tea. Assume...
asked 5 hours ago