Which of the Following Events Will Increase the Domestic Real

question 38

Multiple Choice

Which of the following events will increase the domestic real interest rate in an open economy?

• A)An increase in domestic saving
• B)A decrease in the domestic saving
• C)A decrease in the perceived riskiness of investing in the domestic economy
• D)An increase in net capital inflow

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Definitions:

Paid-in Capital

Funds raised by a company through the sale of stock or other equity instruments, reflecting the investment made by shareholders.

Retained Earnings

Profits of a company that are not distributed as dividends but are instead reinvested in the business or kept as reserve.

Par Value

The face value of a bond or the stated value of a share of stock, as assigned by the issuing company.