Other things the same, which of the following responses would we expect to result from an decrease in U.S. interest rates?
A)U.S. citizens decide to hold more foreign bonds.
B)People choose to hold more currency.
C)You decide to purchase a new oven for your cookie factory.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A decrease in U.S. interest rates makes foreign bonds more attractive, encourages holding more currency due to lower opportunity cost, and stimulates investment in capital goods like a new oven due to cheaper borrowing costs.

Other Things the Same, Which of the Following Responses Would