If the Fed Increases Interest Rates in the U

question 186

Multiple Choice

If the Fed increases interest rates in the U.S. relative to other nations,

• A) foreign investors are likely to transfer funds to U.S. investments.
• B) foreign investors are likely to reduce their investment in U.S. securities.
• C) foreign governments will likely reduce their interest rates further, to remain complementary to what the U.S. is doing.
• D) foreign investors will see this as a sign of a looming recession and redirect their funds to time deposits.

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Definitions:

Bundle

A combination of various goods and services that a consumer can choose to consume, given their income and preferences.

Entertainment

Activities, performances, or media produced to provide enjoyment and amusement to individuals or groups.

Subsidy

is financial assistance provided by the government to individuals or groups to support an economic activity deemed beneficial.

Revealed Preferred

A concept in consumer choice theory that preferences can be determined by observing consumer choices under different constraints.