In the portfolio balance model, other things equal, an increase in the home country wealth because of a current account surplus will: a. reduce home country demand for money b. reduce home country demand for foreign bonds c. have an intermediate effect on the domestic interest rate (without more information) d. not affect the domestic demand for either foreign or domestic bonds.
In the portfolio balance model, other things equal, an increase in the home country wealth because of a current account surplus will: a. reduce home country demand for money b. reduce home country demand for foreign bonds c. have an intermediate effect on the domestic interest rate (without more information) d. not affect the domestic demand for either foreign or domestic bonds.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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PQ 7
In the portfolio balance model, other things equal, an increase in the home country wealth because of a current account surplus will:
a. reduce home country
b. reduce home country demand for foreign bonds
c. have an intermediate effect on the domestic interest rate (without more information)
d. not affect the domestic demand for either foreign or domestic bonds.
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