QUESTION 5 An inflow of investment funds into the United States from overseas is

Question

QUESTION 5 An inflow of investment funds into the United States from overseas is likely to result from a(n): Decline in expectations for economic growth in the United States O Growing belief among investors that the U.S. dollar (S) is overvalued O Rise in U.S. interest rates relative to world interest rates O Increase in the U.S. inflation rate QUESTION 6 Everything else fundamental remaining unchanged, the monetary approach predicts that a 5 percent cut in the money supply by the Fed will inflation in the U.S. economy O a decrease in the market rate of interest in the U.S. O an increase in foreign investments by the Americans. O an appreciation of the U.S. dollar vis-à-vis other currencies.

Explanation / Answer

5)

rise in US interest rates relative to world interest rates

the above is answer

because investment flow due to higher returns

6)

an appreciation of the US dollar vis a vis other currencies

the above is the answer

as lower money supply raises the interest rate which would enhance demand for dollars.

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