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:

True Regression Coefficients

The actual values of the coefficients in the population regression equation, which describe the relationship between independent and dependent variables.

Y-Intercept

The point at which a line crosses the y-axis in a graph, representing the value of the dependent variable when the independent variable is zero.

Slope

A measure of the steepness or incline of a line, often represented as the ratio of the change in the y-value over the change in the x-value between two points on the line.

True Regression Line

The exact linear relationship between the independent and dependent variables in a population.