Assume That Capital Is Not Perfectly Mobile or Substitutable Between $\Delta\varepsilon$

question 30

Multiple Choice

Assume that capital is not perfectly mobile or substitutable between country A and country B.In this case the relationship between the interest rates in country A and country B can be expressed as:

• A) r_A = r_B - \(\Delta\varepsilon\).
• B) r_B = r_B - \(\Delta\varepsilon\)+ x.
• C) r_A = r_A - \(\Delta\varepsilon\) - x.
• D) r_A = r_B - \(\Delta\varepsilon\) + x.

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Definitions:

Regression Formula

An equation used in statistical analysis to predict the value of a dependent variable based on one or more independent variables.

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Regression Line

A line through a scatter plot of data points that best expresses the relationship between those points, often used in predictive analytics.