All Things Considered,it Is Unlikely That Equality of Real Interest

question 21

Multiple Choice

All things considered,it is unlikely that equality of real interest rates across countries is a good description of reality,especially in the short run.The following options explain the reasons for this EXCEPT:

• A) identical nominal returns imply very different real returns for investors in different countries.
• B) returns in different currencies can have different currency risk premiums.
• C) political risks or the threat of capital controls prevent investors from taking advantage of higher returns in other countries.
• D) PPP deviations are not sizable and prolonged.

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Definitions:

Compensation

Payment or benefits provided to employees in exchange for their labor or services.

Hawthorne Studies

A series of experiments conducted to examine how different conditions affect worker productivity, highlighting the importance of social relations and worker satisfaction.

McGregor's Theory

A concept of human motivation, management, and leadership that divides workers' motivations into two categories, Theory X and Theory Y.

Social Setting

The context or environment in which social interactions occur, including the cultural, historical, and physical aspects that influence these interactions.