Which of the following is a consistent response to an increase in the U.S. real interest rate?
A)a London bank purchases a U.S. bond instead of a Japanese bond it had considered purchasing.
B)U.S. firms decide to buy more capital goods
C)a U.S. citizen decides to put less money in his savings account than he had planned.
D)All of the above are consistent.

Question

Quizplus · Accepted Answer

An increase in the U.S. real interest rate makes U.S. bonds more attractive to foreign investors, like a London bank, compared to bonds from other countries, such as Japan.

Which of the Following Is a Consistent Response to an Increase