If the U.S. interest rate is 4% per year and the U.K. interest rate is 9% per year, then:
a. an investor will see no reason to invest in the United Kingdom.
b. an investor will borrow money in the United Kingdom and invest it in the United States.
c. an investor can borrow money in the United States and invest it in the United Kingdom and profit.
d. an investor will find that the returns are the same in both countries.
Ans: c. an investor can borrow money in the United States and invest it in the United Kingdom and profit.
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If the institutions in an economy change from being inclusive to extractive, then in the economy:
A) the returns to entrepreneurship will increase. B) the opportunity cost of entrepreneurship will decrease. C) the number of entrepreneurs will decrease. D) existing entrepreneurs will earn higher profits.
Which of the following would cause a decrease in aggregate demand?
A) a rise in wages B) an increase in the money supply C) a fall in investor confidence D) an increase in the price level