Which of the following will occur if a country with sufficient market power restricting foreign lending?
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.
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Which of the following would result from international financial freedom?
A. Maximizes world product.
B. Hurts poor countries.
C. Hurts wealthy countries.
D. Helps all citizens in both poor and wealthy countries.
Hedging, or reducing risk, is the same as adding value or return to the firm.
In which of the following cases borrowers in wealthy countries that have few domestic investment opportunities would gain?
All restrictions on capital flows between nations were removed.
B. Capital flows between nations are prohibited.
C. Factor price equalization takes place.
D. Governments allowed free markets to determine interest rates.
Stabilizing speculation reinforces market forces by intensifying an appreciation or a depreciation in a currency's exchange value.