Which of the following will most likely result in a lower real interest rate in a nation?
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2 points
The nation provides an investment tax credit to new businesses.
The citizens of the nation increase their savings for retirement.
The nation is experiencing political instability and economic risk.
The nation’s central bank sells government bonds in the open market.
The nation’s government increases its borrowing to finance spending on capital projects.

Respuesta :

The option that will most likely result in a lower real interest rate in a nation is:"The nation’s central bank sells government bonds in the open market."When a central bank sells government bonds in the open market, it increases the supply of bonds available for purchase. This increase in the supply of bonds tends to decrease their prices and increase their yields (interest rates). As bond yields increase, interest rates in the broader economy also tend to rise.Conversely, if the central bank were to buy government bonds in the open market, it would decrease the supply of bonds available for purchase, which tends to increase their prices and decrease their yields (interest rates). This action often leads to lower real interest rates in the economy, stimulating borrowing and investment.The other options may have different effects on interest rates, but they are less directly related to influencing the supply and demand dynamics of the bond market, which is a primary determinant of real interest rates.