Exchange Rates and the Balance of Payments (id: 7c520a667)

本题目来源于试卷: Exchange Rates and the Balance of Payments，类别为 IB经济学

[单选题]
Which of the following statements is not consistent with the likely effect( adcc2v.llj2di h/5pd k2t e:w,9g c(h k*a s6sdsiwcyz+x:* of an increase in interest rates in Mas*d*eyh sdsc2tc x,+( :6kika 9wz:gwlaysia?

A. Malaysian firms reduce their investment demand.
B. Malaysian households reduce their consumption demand.
C. British investors increase their investments in Malaysia.
D. The supply of foreign exchange decreases in the foreign exchange market in Malaysia.


参考答案:  D


本题详细解析:

D

$\underset{‾}{\text{Explanation}}$:  D is the incorrect statement. Foreign investors buy more Malaysian investments due to the increased interest rates. Consequently, the supply of foreign currency increases (S${}_1$ to S${}_2$) as they exchange foreign currencies for Malaysian ringgit.

A and B are consistent with a rise in Malaysian interest rates. The cost of loanable funds is interest rates; increased interest rates disincentivise borrowing by Malaysian firms and households, leading to a decline in investment and consumption expenditures.

C is consistent with the view that British investors are attracted to higher interest rates because of higher investment returns.

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