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:

Discrimination

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex.

Elderly

Refers to individuals in a population who are aged, typically defined as being of retirement age or older, often considered 65 years and above in many societies.

Normative Economic Statements

Assertions about what ought to be in the economy, reflecting judgments and prescriptions for economic policy.

Positive Economic Statements

Statements that can be tested and validated; they describe the world as it is versus how it should be.