Other Things the Same,an Increase in the U

question 16

Multiple Choice

Other things the same,an increase in the U.S.real interest rate induces

• A)Americans to buy more foreign assets,which increases U.S.net capital outflow.
• B)Americans to buy more foreign assets,which reduces U.S.net capital outflow.
• C)foreigners to buy more U.S.assets,which reduces U.S.net capital outflow.
• D)foreigners to buy more U.S.assets,which increases U.S.net capital outflow.

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Definitions:

Depreciate

A decline in an asset's value over time, frequently caused by deterioration or becoming outdated.

Managed Floating

A system where a country's exchange rate is allowed to fluctuate in response to the foreign exchange market, but the central bank intervenes to stabilize the currency when necessary.

Exchange Rates

The value of one currency in terms of another currency, which determines how much foreign currency can be obtained with a unit of domestic currency.

Governments

Central or local governmental bodies that manage and administer public policies, laws, and services within a specified territory.