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Major improvements in computer information technology and communications in the late 1990s fueled an increase in investment demand in the United States. What is the predicted impact of this increased investment demand in the U.S., which is a large, open economy, on the U.S. interest rate, the U.S. exchange rate, and U.S. net exports, holding other factors constant? Illustrate your Answer graphically and explain in words.
Financial Assets
Instruments that hold monetary value, such as stocks, bonds, or bank deposits, which can be traded in financial markets.
Term
Refers to a specific period of time or to conditions stipulated for a particular agreement or contract.
Interest Rate
The price, shown in the form of a percentage of the principal, charged by lenders to borrowers for asset employment.
Diversify
The attempt to spread investment risk by selecting a variety of investment options within a portfolio.
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