Why might a country's savings rate have a high positive correlation to its investment rate?
A) A country's gains from intertemporal trade may have been large.
B) governments' regulation to avoid inflation
C) A country's savings rate and investment rate are generally not positively correlated but rather have negative correlation.
D) governments' regulation to avoid large current account balances
E) A government has not practiced sufficient fiscal regulation.
D
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Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had expected it to be. The real interest rate she pays is
a. higher than she had expected, and the real value of the loan is higher than she had expected. b. higher than she had expected, and the real value of the loan is lower than she had expected. c. lower than she had expected, and the real value of the loan is higher than she had expected. d. lower then she had expected, and the real value of the loan is lower than she had expected.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.