Consider the Case of a U

question 11

Multiple Choice

Consider the case of a U.S. bank operating in the Cayman Islands and a U.S. bank operating in New York. If a business were to apply for a loan in U.S. dollars at the Cayman Island location, then it is probably the case that:

• A) The interest rate on the loan is higher than the one in New York.
• B) The interest rate on the loan is lower than the one in New York.
• C) The interest rates are the same.
• D) The interest rate on the loan is lower, but repaid in Cayman Island dollars.

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Definitions:

Economic Behaviorists

Researchers or theorists who study the decision-making processes of individuals and institutions, often investigating how psychological, social, cognitive, and emotional factors affect economic decisions.

Supply-Siders

Advocates of the economic theory that reducing taxes and regulations on businesses stimulates production and economic growth.

Rational Expectationists

Economists who believe that individuals and firms use all available information when making economic decisions, leading to outcomes that can be anticipated based on past trends.

Fiscal Policy

Government policies on taxation and spending that are used to influence the economy.