Figure 5.4 Suppose the World Consists of Two Large Open Economies, Canada

question 29

Multiple Choice

Figure 5.4

Suppose the world consists of two large open economies, Canada and the rest of the world. The figures above represent loanable funds graphs for these two economies.
-Refer to Figure 5.4.At an interest rate of 7%,

• A) foreign borrowers have an incentive to offer lenders in Canada an interest rate greater than 7%.
• B) foreign lenders have an incentive to offer borrowers in Canada an interest rate less than 7%.
• C) Canadian lenders have an incentive to offer borrowers in the rest of the world an interest rate of 7%.
• D) Canadian borrowers have an incentive to offer Canadian lenders an interest rate greater than 7%.

---

Definitions:

Legislation

Laws or statutes that have been enacted by a legislative body.

Legal Theory

A framework or ideology that underpins laws, legal practices, and their interpretation within a legal system.

Collective Bargaining

The process of negotiation between employers and a group of employees aimed at reaching agreements to regulate working conditions.

Charter of Rights and Freedoms

An essential legal charter in Canada assuring its citizens of foundational freedoms and rights.