In an Open Economy, an Increase in Capital Inflows ______

question 10

Multiple Choice

In an open economy, an increase in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment.

• A)increases; increases
• B)increases; decreases
• C)decreases; does not change fall
• D)decreases; increases

---

Definitions:

In-Group

A social group to which an individual feels they belong, often characterized by a strong sense of identity and loyalty.

Out-Group

A social group toward which a person feels a sense of competition or opposition.

Social Identity Theory

A psychological theory that explains how individuals categorize themselves and others into groups, leading to identification with one's own group and discrimination against others.

Social Comparison

The comparison of oneself to others in ways that raise one’s self-esteem.