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.