An Increase in Real Interest Rates in the United States

question 9

Multiple Choice

An increase in real interest rates in the United States

• A)discourages both U.S.and foreign residents from buying U.S.assets.
• B)encourages both U.S.and foreign residents to buy U.S.assets.
• C)encourages U.S.residents to buy U.S.assets,but discourages foreign residents from buying U.S.assets.
• D)encourages foreign residents to buy U.S.assets,but discourages U.S.residents from buying U.S.assets.

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Definitions:

Equilibrium GDP

The level of Gross Domestic Product at which the total quantity of final goods and services produced equals the total quantity demanded.

Savings

The portion of income that is not spent on current expenditures and is set aside for future use, often in a bank or investment.

Aggregate Demand

The comprehensive call for goods and services within an economic setting, set at a particular total price level for a given temporal duration.

Aggregate Supply

Refers to the total quantity of goods and services that producers in an economy are willing and able to supply at a given overall price level in a given period.