Ceteris Paribus, If the Australian Real Interest Rate Were to Increase

question 15

Multiple Choice

Ceteris paribus, if the Australian real interest rate were to increase, Australian net foreign investment would:

• A) rise
• B) be unaffected
• C) fall
• D) it is impossible to tell

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Definitions:

Weak Axiom of Cost Minimization (WACM)

An economic principle stating that if a set of goods is chosen over another set at the same prices, then the chosen set should not cost more than the other when prices change.

Input Bundle

A combination of resources or inputs used in the production of goods and services.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Price Ratio

The relative price of one good or service compared to another, often used in economic analysis.