Author Question: The definition of a country that is called a ________ when its stock of foreign financial assets is ... (Read 215 times)

karen · **on:** Jun 30, 2018

The definition of a country that is called a ________ when its stock of foreign financial assets is greater than the foreign-owned holdings of domestic assets.

A) net creditor
B) net debtor
C) surplus nation
D) deficit nation

Question 2

If increased supply leads to lower prices, why is rapid growth of the money supply usually accompanied by high interest rates?

What will be an ideal response?

mjbamaung · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

The key issue is that rapid growth of the money supply usually creates inflation, and banks raise nominal interest rates to compensate. Real interest rates may remain low or be even negative at times.