If U.S. citizens decide to purchase more foreign assets at each interest rate, the U.S. real interest rate
a. increases, the real exchange rate of the dollar appreciates, and U.S. net capital outflow decreases.
b. increases, the real exchange rate of the dollar depreciates, and U.S. net capital outflow increases.
c. decreases, the real exchange rate of the dollar depreciates, and U.S. net capital outflow decreases.
d. decreases, the real exchange rate of the dollar appreciates, and U.S. net capital outflow increases.
b
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Under the liquidity premium theory, a flat yield curve indicates that investors expect future short-term rates to
A) fall. B) rise. C) remain constant. D) either fall or remain constant.
A person is dynamically inconsistent if:
A. lapses in self-control occur. B. he does not always follow through on his plans and intentions. C. he changes his ranking of alternatives available at some future date as the date approaches or once it arrives. D. All of these are sufficient for dynamic inconsistency.