A Small Open Economy Increases Its Investment Demand

question 21

Multiple Choice

A small open economy increases its investment demand.This causes the world real interest rate to ________ and the country's current account balance to ________.

• A)rise; fall
• B)remain unchanged; rise
• C)rise; rise
• D)remain unchanged; fall

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Definitions:

Top-Down Processing

A cognitive process that emphasizes the importance of conceptual knowledge, expectations, and memories in making interpretations and decisions, starting with generalities before moving to specifics.

Fragrant Odors

Pleasant and sweet-smelling scents that are often produced by flowers, herbs, spices, and other substances.

Pleasant Memories

Recollections of past events or experiences that evoke positive emotions and feelings of happiness or contentment.

Cold Spots

Areas with significantly lower temperatures or activity levels compared to surrounding areas, often used metaphorically to describe areas of low economic or social activity.