When There Are Two Large Open Economies,if Desired International Lending

question 76

Multiple Choice

When there are two large open economies,if desired international lending by the domestic country exceeds desired international borrowing by the foreign country,then

• A)domestic saving must rise.
• B)domestic saving must fall.
• C)the world real interest rate must fall.
• D)the world real interest rate must rise.

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Definitions:

Present Values

The present value of a future amount of money or series of payments, calculated using a designated interest rate.

Cash Inflows

Money or funds coming into a business or project, often as revenue, financing, or investment.

Cash Outflows

Money going out of a business, including expenses, investments, and distributions to shareholders.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.