If real interest rates in the US increase relative to real interest rates in other countries which of the following will occur?
a. capital will flow out of the US
b the demand for loanable funds in the US will increase
c. the supply of the loanable funds will increase in other countries
d. the supply of loanable funds will increase
e. the demand for loanable funds will increase in other countries
Ans: d. the supply of loanable funds will increase
You might also like to view...
According to the shortrun (specificfactors) model, how will FDI affect the marginal productivity of labor in the recipient nation?
a. The MPL will rise in the production of both the labor and capitalintensive goods. b. The MPL will rise only in the production of the labor intensive good. c. The MPL will rise only in the production of the capitalintensive good. d. The MPL will fall in the production of both the labor and capitalintensive goods.
If a good is normal and its price decreases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.