As the real interest rate in the domestic loanable funds market increases,
A) the cost of purchasing goods and services during the current period will decline.
B) the net inflow of capital from abroad will increase.
C) the inflationary premium will rise, and the money rate of interest will decline.
D) the inflationary premium will fall, and the money rate of interest will rise.

Question

Quizplus · Accepted Answer

As the real interest rate increases, it becomes more attractive for foreign investors to invest in the domestic market, leading to a net inflow of capital from abroad.

As the Real Interest Rate in the Domestic Loanable Funds