A Small Open Economy

question 59

Multiple Choice

A small open economy

• A)is unable to affect the world real interest rate by its borrowing and lending decisions.
• B)will always be a net borrower from abroad.
• C)will always be a net lender abroad.
• D)is almost never able to borrow abroad.

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Definitions:

Agency Contract

A legal agreement wherein one party (the agent) agrees to act on behalf of another party (the principal) in a business transaction or other matter.

Third Party

An individual or group not directly involved in a contract or legal transaction but could be affected by its outcome.

Agency Relationship

A legal and fiduciary relationship between two parties, where one (the agent) is authorized to act on behalf of the other (the principal) in business transactions.

Illegal

Activities or practices that are forbidden by law and subject to penalties if violated.