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Why Would a Country Change Its Interest Rate

Question 11

Multiple Choice

Why would a country change its interest rate?


A) Poorer countries peg their interest rates to the exchange rate.
B) Countries try to lure foreign investors with lower interest rates.
C) Lowering interest rates can reduce the country's trade deficit.
D) Increasing interest rates can lead to an appreciation of the currency.
E) The International Monetary Fund (IMF) encourages debtor countries to lower interest rates during currency crises.

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