In an Open Economy, If Domestic Citizens Decide to Save

question 88

Multiple Choice

In an open economy, if domestic citizens decide to save more, then the domestic real interest rate will ________ and the level of capital investment in the country will ________, holding other factors constant.

• A)increase; increase
• B)increase; decrease
• C)decrease; decrease
• D)decrease; increase

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Definitions:

Raw Materials

Basic materials that are used in the production process to create goods and products.

Ethical Standards

Principles that guide conduct in business and professional practices to ensure fairness, transparency, and integrity.

Shipping Terms

Conditions agreed upon by the buyer and seller regarding the delivery of goods, including who is responsible for shipping costs and the risk of loss.

Depreciate

The structured allocation of a material asset's cost over its effective life.