Assume USInterest Rates Decrease but Interest Rates in Other Countries Remain

question 6

Multiple Choice

Assume U.S.interest rates decrease but interest rates in other countries remain the same.Which of the following is FALSE?

• A)the value of the U.S. dollar will decrease
• B)the exchange rate of foreign currency to U.S. dollars will increase
• C)the U.S. will experience an outflow of funds
• D)U)S. stock values will increase
• E)U)S. bond prices will increase

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Definitions:

Adage

A short, pointed and memorable saying that expresses a truth or insight.

Private Saving

The portion of an individual's or household's income that is not spent on consumption or taxes and is instead set aside for future use.

National Saving

The total amount of savings generated within a country, which equals the sum of private and public savings.

Closed Economy

An economic system that does not interact with other economies in terms of trade, investment, or migration, relying entirely on its own resources.