Question
Rating agencies rate countries on the perceived riskiness of investing in their economies. Standard and Poor's, one of the main rating agencies, downgraded the credit
Rating agencies rate countries on the perceived riskiness of investing in their economies. Standard and Poor's, one of the main rating agencies, downgraded the credit rating for some countries' Treasury bonds in 2011. According to the text, if Canada is now perceived as riskier:
a)more investors will be willing to invest in Canada. Net capital outflows will fall, shifting the I + NCO curve to the left, causing the equilibrium interest rate to rise.
b)fewer investors will be willing to invest in Canada. Net capital outflows will rise, shifting the I + NCO curve to the right, causing the equilibrium interest rate to rise.
c)fewer investors will be willing to invest in Canada. Net capital outflows will rise, shifting the I + NCO curve to the left, causing the equilibrium interest rate to fall.
d)more investors will be willing to invest in Canada. Net capital outflows will fall, shifting the I + NCO curve to the left, causing the equilibrium interest rate to fall.
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