A Decrease in the Foreign Real Interest Rate Would Cause

question 23

Multiple Choice

A decrease in the foreign real interest rate would cause the domestic country's net exports to ________ and cause the domestic country's IS curve to ________.

• A)rise; shift up
• B)rise; shift down
• C)fall; shift up
• D)fall; shift down

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Definitions:

Profit Margin

A financial performance ratio, calculated by dividing net income by sales revenue, indicating how much profit a company keeps from its sales.

ROE

Return on Equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively a company uses investments to generate earnings growth.

P/E Ratio

Price to Earnings Ratio, a valuation metric comparing a company's market share price to its per-share earnings.

Stock Price

The cost of purchasing a share of a company's stock, representing the market's value of a share of the company's equity.