Other things the same,if the price level falls,domestic interest rates
A)rise,so domestic residents will want to hold more foreign bonds.
B)rise,so domestic residents will want to hold fewer foreign bonds.
C)fall,so domestic residents will want to hold more foreign bonds.
D)fall,so domestic residents will want to hold fewer foreign bonds.

Question

Quizplus · Accepted Answer

When the price level falls, it typically leads to lower interest rates as the central bank may lower rates to stimulate the economy. Lower domestic interest rates make foreign bonds more attractive, so domestic residents will want to hold more foreign bonds.

Other Things the Same,if the Price Level Falls,domestic Interest Rates