Everything Else Being Constant, a Lower Real Interest Rate

question 73

Multiple Choice

Everything else being constant, a lower real interest rate

• A)increases desired saving and net exports.
• B)decreases desired saving but increases net exports.
• C)increases desired saving and investment.
• D)increases desired investment but decreases net exports.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, considering all interest payments and the repayment of principal.

Par Value

The face value or nominal value of a bond, share of stock, or other financial instrument, usually representing its value upon issuance.

Total Rate Of Return

The overall amount of profit or loss generated by an investment over a given period, including both capital gains and income, expressed as a percentage of the initial investment.

Zero-Coupon Bond

A debt security that does not pay periodic interest and is sold at a discount from its face value, with its return coming at the bond's maturity.