Assume That Interest Rates of Most Industrialized Countries Are Similar

question 36

Multiple Choice

Assume that interest rates of most industrialized countries are similar to the U.S. interest rate. In the last few months, the currencies of all industrialized countries weakened substantially against the U.S. dollar. If non-U.S. firms based in these foreign countries financed with U.S. dollars during this period (even when they had no receivables in dollars) , their effective financing rate would have been:

• A) negative.
• B) zero.
• C) positive, but lower than the interest rate of their respective countries.
• D) higher than the interest rate of their respective countries.

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Definitions:

Embargo

A government-imposed ban on trade or specific goods with a particular country, often used as a diplomatic or economic sanction.

Lend-Lease Act

A program initiated by the United States during World War II that allowed the U.S. to supply Allied nations with vast amounts of military materiel while avoiding direct involvement in combat.

Military Supplies

Equipment, tools, vehicles, and logistical support materials utilized by armed forces for the purposes of national defense and warfare operations.

Impoverished England

Refers to periods in English history marked by widespread poverty and economic hardship.