-In the Above Figure, the Economy Is at Point a on the Initial

question 27

Multiple Choice

-In the above figure, the economy is at point a on the initial demand for loanable funds curve DLF₀. What happens if the real interest rate rises?

• A) There is a movement to a point such as b on the demand for loanable funds curve DLF₀.
• B) The demand for loanable funds curve shifts rightward to a curve such as DLF₂.
• C) The demand for loanable funds curve shifts leftward to a curve such as DLF₁.
• D) none of the above

Recognize the role of government and central bank policies in influencing exchange rates.

Understand how economic indicators and performances affect exchange rates.

Interpret the balance of trade and its impact on the financial account and national economy.

Understand the components and importance of a nation's central bank official reserves.

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Definitions:

Bond Purchase

The acquisition of debt securities issued by corporations or governments, representing a loan made by the investor to the issuer.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically involving periodic interest payments and the return of principal at maturity.

Held-to-maturity Securities

These are financial assets that a company has the intent and ability to hold until they mature.