why is the real interest rate higher in an open eocnomy, compared to the interest rate...

why is the real interest rate higher in an open eocnomy, compared to the interest rate in a closed economy?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

a. In a small open economy, the domestic real interest rate can be higher than the...

a. In a small open economy, the domestic real interest rate can be higher than the world real interest rate. Answer true, false, or uncertain. Please briefly explain your answer. b.Consider a country that is initially in steady state. According to the Solow–Swan model, if the technology parameter A increases but the saving rate falls, then the per capita capital stock increases and the country moves to a new, higher steady state level of per capita income. Answer true, false,...

If real U.S. interest rate is higher than real European interest rate, the demand for U.S....

If real U.S. interest rate is higher than real European interest rate, the demand for U.S. Dollar would likely ____, and the supply of Euros to be exchanged for dollars would likely ____, other factors held constant. 1 point a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease

In a large open economy, an investment tax credit raises the real interest rate, ______ the...

In a large open economy, an investment tax credit raises the real interest rate, ______ the trade balance, and ______ net capital outflow. a. decreases; decreases b. increases; increases c. decreases; increases d. increases; decreases Assume that a war breaks out abroad, and foreign investors choose to invest more in a large safe country, the United States. Then, the U.S. real interest rate: a. and net exports will both fall. b. will fall and net exports will rise. c. will...

Explain why and how investment depends on the real interest rate.

The Fed sets higher interest rate at each price level. Will Inflation and Real GDP increase...

The Fed sets higher interest rate at each price level. Will Inflation and Real GDP increase or decrease? Provide Diagram.

Suppose the rate of interest on borrowing is higher than the rate of interest at which...

Suppose the rate of interest on borrowing is higher than the rate of interest at which you can lend. Illustrate and explain the implications for the efficient frontier, and also for portfolio selection decisions where investors have the same information but differing degrees of risk aversion. No calculations are necessary in this section.

Question