If the World Real Interest Rate Exceeds the Canadian Real

question 63

Multiple Choice

If the world real interest rate exceeds the Canadian real interest rate, what would Canadian savers most likely do?

• A) Canadian savers would prefer to buy foreign assets.
• B) Canadian savers would prefer to buy Canadian assets.
• C) Canadian savers will prefer to wait until the two real interest rates are again equal.
• D) Canadian savers will sell their foreign assets and buy Canadian assets instead.

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Definitions:

Sunk Cost

Expenses that have already been incurred and cannot be recovered or altered, which should not affect future business decisions.

Materials Costs

The expense incurred by acquiring raw materials necessary for producing goods, excluding indirect materials like maintenance supplies.

Processing Costs

Expenses related to the steps involved in transforming raw materials into finished goods.

Relevant

Pertinent or related to the matter at hand, often used in decision-making to describe information that should be considered.