Foreign savings often come to the United States in the form of purchasing Treasury securities or investing in American companies. This increases the demand for these investments and puts downward pressure on interest rates, keeping them lower than they would be without this foreign investment.

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Foreign Savings

Question 98

Multiple Choice

Foreign savings

A) keep interest rates lower in the United States than they would be otherwise.
B) keep interest rates higher in the United States than they would be otherwise.
C) are harmful to the U.S.economy.
D) only occur through buying Treasury securities.
E) make it so U.S.firms and governments must undertake their activities at higher costs.

Correct Answer: