Scenario 33-1 Suppose That Political Instability in Other Countries Makes People Fear

question 149

Multiple Choice

Scenario 33-1
Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets.
-Refer to Scenario 33-1. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the United States?

• A)Make it rise which by itself would increase U.S.aggregate demand.
• B)Make it rise which by itself would decrease U.S.aggregate demand.
• C)Make it fall which by itself would increase U.S.aggregate demand.
• D)Make it fall which by itself would decrease U.S.aggregate demand.

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Definitions:

Pons

A part of the brain stem that links the medulla oblongata and the thalamus, involved in regulating breathing and other functions.

Corpus Callosum

A large band of nerve fibers connecting the two hemispheres of the brain, facilitating communication between them.

Cerebellum

The part of the brain at the back of the skull in vertebrates, responsible for coordinating and regulating muscular activity.

Medulla

The lower part of the brainstem, controlling autonomic functions such as heartbeat and breathing.