Suppose the development of the European Union leads to greater investment in Europe.You'd expect
A)a recession in Europe.
B)a decline in the world real interest rate.
C)a rise in the current account in Europe.
D)an increase in the world real interest rate.

Question

Quizplus · Accepted Answer

With greater investment in Europe, the demand for funds will increase, which will lead to an increase in the world real interest rate. The increase in investment will also lead to a decrease in the current account surplus or an increase in the current account deficit due to increased imports of capital goods. A recession is unlikely to occur with increased investment.

Suppose the Development of the European Union Leads to Greater