In the Two-Period SOE Model with Production and Investment, a Decrease

question 40

Multiple Choice

In the two-period SOE model with production and investment, a decrease in the world real interest rate

• A)lowers investment.
• B)leaves output unchanged.
• C)increases output.
• D)reduces the current account surplus.
• E)increases the current account surplus.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Transactive Memory

Transactive memory is a psychological concept explaining how groups collectively store, recall, and share knowledge through the relationships among members.

Metastatements

Communications that provide commentary about other statements, often clarifying or interpreting them.

Persuasive Arguments Theory

View that people in groups are persuaded by novel information that supports their initial position, and thus become more extreme in their endorsement of their initial position.