What Is an Accurate Characterization of the Role of International

question 24

Multiple Choice

What is an accurate characterization of the role of international business investments in Latin America today?

• A) Foreign investment by Western international business is frowned upon.
• B) Debt and inflation are down and foreign investment is welcomed.
• C) Latin America is plagued with low growth, high debt, and hyperinflation which discourages investment.
• D) Latin American governments are purchasing businesses from private investors.
• E) There are fewer opportunities for investment because of communist rule.

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Definitions:

Real Interest Rate

The interest rate adjusted for inflation, representing the real cost of borrowing or the real yield to lenders and investors.

Nominal Interest Rate

The interest rate before adjustments for inflation, as opposed to the real interest rate which is adjusted for inflation.

Equilibrium Interest Rate

The equilibrium interest rate is the rate at which the demand for funds equals the supply of funds in the financial markets, balancing savings and borrowing.