The FE Curve Has A

question 58

Multiple Choice

The FE curve has a:

• A)negative slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the official settlements balance.A decrease in output levels is thus needed to reduce that surplus.
• B)positive slope because a decrease in domestic interest rates leads to capital outflows causing a surplus in the official settlements balance.An increase in output levels is thus needed to reduce that surplus.
• C)positive slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the financial account balance.An increase in output levels is thus needed to reduce that surplus.
• D)negative slope because an increase in domestic interest rates leads to capital outflows causing a deficit in the financial account balance.An increase in output levels is thus needed to reduce that deficit.

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Definitions:

Security Interest

A legal claim or lien on collateral that secures the performance of an obligation, usually repayment of a debt.

Collateral

An asset offered to secure a loan or other credit and subject to seizure upon default.

Security Interests

A lawful demand or security interest on assets that have been offered as a guarantee, typically to ensure the repayment of a borrowed sum.

Time of Perfection

The point at which a security interest is legally established against third parties, typically by filing or possession.