By restricting foreign lending, a country with sufficient market power can:
A)increase world production.
B)lower world interest rates.
C)bid up the rate that domestic lenders get after taxes.
D)bid up the rate that foreign borrowers have to pay.

Question

Quizplus · Accepted Answer

By restricting foreign lending, a country can reduce the supply of credit available to foreign borrowers, which results in increasing the demand for credit among such borrowers. This, in turn, leads to a higher interest rate that foreign borrowers must pay to obtain credit in the country.

By Restricting Foreign Lending, a Country with Sufficient Market Power