In an open economy, we know that individuals must choose between which of the following?
A) Domestic bonds and foreign currency.
B) Domestic goods and foreign currency.
C) Foreign goods and domestic currency.
D) Domestic bonds and foreign stocks.
E) Domestic and foreign bonds.

Question

Quizplus · Accepted Answer

In an open economy, individuals have the option to invest in both domestic and foreign bonds, reflecting the broader range of investment opportunities available beyond the domestic market. This choice allows investors to diversify their portfolios and potentially benefit from differences in interest rates, economic growth, and currency values between countries.

In an Open Economy, We Know That Individuals Must Choose