If Asset Owners in Japan and the United States Consider

question 348

Multiple Choice

If asset owners in Japan and the United States consider Japanese and U.S. assets as good substitutes for each other and if the U.S. interest rate is 5% and the Japanese interest rate is 2%, then all of the following will occur EXCEPT that:

• A)financial inflows will reduce the U.S. interest rate.
• B)financial outflows will increase the Japanese interest rate.
• C)the interest rate gap between the United States and Japan will diminish.
• D)loanable funds will be exported from the United States to Japan.

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Definitions:

Variable

A concept that can take on more than one value.

Selective Observation

The tendency to notice or focus on information that confirms one’s preconceptions, while ignoring contradictory evidence.

Automobile Accident

An unexpected, undesirable event involving a vehicle, often leading to damage or injury, and attributed to human error, environmental conditions, or technical failure.

Observers

Individuals or entities that watch or monitor activities, events, or behaviors without directly participating.