Use the Following to Answer Questions

question 368

Multiple Choice

Use the following to answer questions:
-In the absence of international capital flows,the equilibrium interest rate in the Canadian market for loanable funds is 3%,while in Germany,it is 7%.International borrowing and lending between Canada and Germany could result in a common interest rate of _____% and _____.

• A) 5;capital inflows to Canada matching the capital outflows from Germany
• B) 3;massive capital inflows from Germany to Canada
• C) 4;capital outflows from Canada matching the capital inflows to Germany
• D) 7;massive capital inflows from Canada to Germany

---

Definitions:

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over another, often due to a perceived superiority or an emotional attachment.

Monopoly Power

The ability of a company or entity to control the price and supply of a product or service, due to the lack of competition in the market.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and economic agents have fully adjusted to any economic changes, leaving no incentives for further adjustments.

Minimum Average Cost

The lowest point on the average cost curve, signifying the most efficient scale of operation for a firm.