A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

Refer to Figure 10.5. A shift from MP1 to MP2 will occur if

A) the Fed decreases its target for the short-term nominal interest rate. B) the term structure effect increases. C) the default-risk premium decreases. D) the expected inflation rate increases.

Bounded rationality suggests that

A) individuals might make "incorrect" decisions because they are unable to consider all possible options. B) individuals would rather have less choice to more choice. C) rational decisions can only be made when choices are restricted. D) individuals are happier when their choices are restricted or "bounded."