Other things the same,if the real interest rate in a country falls,domestic residents will desire to purchase
A)more capital goods and more foreign bonds.
B)more capital goods but fewer foreign bonds.
C)more foreign bonds but fewer capital goods.
D)fewer capital goods and fewer foreign bonds.

Question

Quizplus · Accepted Answer

When the real interest rate falls, borrowing becomes cheaper, encouraging investment in capital goods. Additionally, lower domestic returns make foreign bonds more attractive, leading to increased purchases of foreign bonds.

Other Things the Same,if the Real Interest Rate in a Country