The Domestic Real Interest Rate (R)for a Given Country Must

question 73

Multiple Choice

The domestic real interest rate (r) for a given country must be the same as the world real interest rate (r^w) ________.

• A)only if capital is not perfectly mobile
• B)because with no barriers to capital flows,if r^w > r domestic residents would just lend abroad putting upward pressures on the domestic rate until both rates equal each other
• C)because with no barriers to capital flows,if r^w < r domestic residents would only lend to foreigners putting downward pressures on the domestic rate until both rates equal each other
• D)all of the above
• E)none of the above

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Definitions:

Reject

In statistical testing, to dismiss the null hypothesis based on evidence that supports the alternative hypothesis.

H0

The notation for the null hypothesis in statistical hypothesis testing, representing no effect or no difference.

Reject

In statistical analysis, to refuse the null hypothesis, concluding there is sufficient evidence to support a significant effect or difference.

H0

Stands for the null hypothesis in statistical hypothesis testing, representing the assumption that there is no significant difference or effect.