factors that affect the level of international economic activity are: investment flows, monetary conditions, market confidence....

factors that affect the level of international economic activity are: investment flows, monetary conditions, market confidence. (true or false)

Expert Solution

True. Investment Flows,monetary conditions and market confidence affect the level of international Economic activity.

These can be explained as follows :

Investment Flows : Investment keeps on flowing from one country to another in search for higher returns given the risk appetite of the investor. The level investment in a country determines its level of output. So, higher/lower the investment higher/lower is the level of economic activity in the country.

Monetary Conditions : This basically incluedes 2 things - Interest rates and exchange rates. investment tends to flow towards those countries which have higher interest rates and favourable exchange rates.

Market Confidence : This measure the level of optimism the investors have in the overall state of the economy. This is affected by many factors such political stability, government policy towards business, consumer confidence etc. Higher the market confidence, more investment will flow into that country.

Rahul Sunny answered 2 years ago

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