What Are the Effects of an Increase in the Supply

question 30

Multiple Choice

What are the effects of an increase in the supply of loanable funds?

• A) Net capital outflow and the real exchange rate both increase.
• B) Net capital outflow and the real exchange rate both decrease.
• C) Net capital outflow increases, and the real exchange rate decreases.
• D) Net capital outflow decreases, and the real exchange rate increases.

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Definitions:

Market Price

The sale or purchase price of a service or asset in the current market.

After-tax Cost

The expense of an action or item after accounting for the impact of taxation.

Coupon

A financial term referring to the annual interest payment received by a bondholder from the bond's issuer until it matures.

Weighted Average Cost

An inventory valuation method which assumes goods are used in the order in which they were purchased, often leading to a cost that is somewhere between the oldest and newest products.