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Suppose That the Equilibrium Interest Rate in the Canadian Market

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Suppose that the equilibrium interest rate in the Canadian market for loanable funds is 3% prior to any international capital flows in Canada.The equilibrium interest rate in the Japanese market for loanable funds is 7%.If lenders in both nations believe that loans to foreigners are just as good as loans to their own citizens,capital will flow from _____,making interest rates _____ in Japan and _____ in Canada.


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