In an Open Economy, a Decrease in the Perceived Riskiness

question 21

Multiple Choice

In an open economy, a decrease in the perceived riskiness of domestic assets by foreigners, arising, for example, from an increase in political stability, leads to a(n) _______ in the equilibrium domestic real interest rates and to ____ in the quantity of domestic investment.

• A)increase; an increase
• B)increase; a decrease
• C)increase; no change
• D)decrease; an increase

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Definitions:

Dispersion

A measure of the spread of a distribution or the variability of data points around a central value.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean, indicating how spread out the data points are.

Percentile

A measure used in statistics to indicate the value below which a given percentage of observations in a group of observations falls.

Measures of Dispersion

Statistical indicators that describe the spread or variability of a data set.