The Reason That Higher Interest Rates Reduce Aggregate Demand in an Open

question 206

Multiple Choice

The reason that higher interest rates reduce aggregate demand in an open economy with capital flows is that investment

• A)increases generated by higher interest rates are offset by net export decreases.
• B)decreases generated by higher interest rates are coupled with net export decreases.
• C)decreases generated by higher interest rates are offset by net export increases.
• D)increases generated by higher interest rates are coupled with net export increases.

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Definitions:

Taste Receptor Cells

Specialized cells located on the taste buds of the tongue that detect chemical substances in food, allowing the perception of taste.

Papillae

Small protrusions on the surface of the tongue that contain taste buds and aid in the sensation of taste.

Taste Buds

Structures along the sides of many of the tongue’s papillae that are composed of 60 to 100 receptor cells for taste.

Olfactory Receptors

Specialized nerve cells located in the nasal cavity that are responsible for the detection of odor molecules, contributing to the sense of smell.