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

question 42

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)if perfect capital mobility is assumed
• B)because with no barriers to capital flows,if r^w > r domestic residents would just borrow 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

---

Definitions:

Interaction

The reciprocal action or influence between two or more entities, typically resulting in a change or response.

Conflict Interaction

Describes the process by which disputes and disagreements between parties are communicated and managed.

Topic

Refers to the subject or matter being discussed or considered in a conversation, debate, or discourse.

Relational

Pertaining to the way in which two or more concepts, objects, or people are connected, especially in a personal or social context.