In lesser-developed countries (LDCs), interest rates are usually much higher than in developed economies. A reason that is consistent with your understanding of interest rate determination is
a. people in LDCs save at a much higher rate
b. there are fewer businesses in LDCs, so demand is lower
c. consumers in LDCs are less willing to postpone present consumption
d. the opportunity cost of saving in LDCs is lower because of the low levels of income of most of the population
e. the marginal productivity of capital in the LDCs is likely to be lower
C
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What will be an ideal response?
A decrease in the supply of dollars to holders of Mexican pesos would cause the:
a. equilibrium quantity of dollars to decrease. b. equilibrium quantity of dollars to increase. c. equilibrium quantity to remain unchanged. d. all of these.